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REPUBLIC OF THE G.R. No. 170867

PHILIPPINES, REPRESENTED
BY RAPHAEL P.M. LOTILLA,
SECRETARY, DEPARTMENT OF
ENERGY (DOE), MARGARITO B.
TEVES, SECRETARY,
DEPARTMENT OF FINANCE
(DOF), AND ROMULO L. NERI,
SECRETARY, DEPARTMENT OF
BUDGET AND MANAGEMENT
(DBM),
Petitioners,
- versus -
PROVINCIAL GOVERNMENT
OFPALAWAN,REPRESENTED
BY GOVERNOR ABRAHAM
KAHLIL B. MITRA,
Respondent,
x-------------------------------------------x
BISHOP PEDRO DULAY ARIGO, G.R. No. 185941
CESAR N. SARINO, DR. JOSE
ANTONIO N. SOCRATES, PROF.
H. HARRY L. ROQUE, JR.,
Petitioners,
·~
Decision 2 G.R. Nos. 170867 and 185941
- versus - Present:
BERSAMIN, CJ,
HON. EXECUTIVE SECRETARY CARPIO,
EDUARDO R. ERMITA, HON. PERALTA,
ENERGYSECRETARYANGELO DEL CASTILLO,
T. REYES, HON. FINANCE PERLAS-BERNABE,
SECRETARY MARGARITO B. LEONEN,
TEVES, HON. BUDGET AND JARDELEZA, *
MANAGEMENT SECRETARY CAGUIOA,
ROLANDO D. ANDAYA, JR., TIJAM,
HON. PALAWAN GOVERNOR A. REYES, JR.,
JOEL T. REYES, HON. GESMUNDO,
REPRESENTATIVE ANTONIO C. J. REYES, JR.,
ALVAREZ (1st District), HON. HERNANDO, and
REPRESENTATIVE ABRAHAM CARANDANG, JJ **
MITRA (2"d District), RAFAEL E.
DEL PILAR, PRESIDENT AND
CEO, PNOC EXPLORATION Promulgated:
CORPORATION,
Respondents. December 4,
x------------------------------------------------------------
DECISION
TIJAM, J.:
G.R. No. 170867 is a petition for review on certiorari 1 under Rule 45

of the Rules of Court assailing the Decision2 dated December 16, 2005 of the
Regional Trial Court (RTC) of Palawan, Branch 95 in Civil Case No. 3779
which declared the Province of Palawan entitled to forty percent (40%) of
the government's earnings derived from the Camago-Malampaya natural gas
project since October 16, 2001. The petition also seeks ad cautelam to
nullify the RTC Amended Order3 dated January 16, 2006 which directed the
"freezing" of said 40% share under pain of contempt.
·No Part.
··On leave.
1
Rollo (G.R. No. 170867), pp. 9-81.
2
Penned by Judge Bienvenido C. Blancatlor; id. at 83-112.
1
Id. at 113-116.
.~
G.R. No. 185941 is a petition for review on certiorarz-4 under Rule 45

of the Rules of Court assailing the Resolution5 dated May 29, 2008 of the
Court of Appeals (CA) in CA-G.R. SP No. 102247 which dismissed the
certiorari petition questioning the constitutionality of Executive Order
(E.0.) No. 683, 6 and the CA Resolution7 dated December 16, 2008 which
denied the motion for reconsideration.
The Antecedents
The Camago-Malampaya Natural

Gas Project
On December 11, 1990, the Republic of the Philippines (Republic or

National Government), through the Department of Energy (DoE), entered
into Service Contract No. 38 with Shell Philippines Exploration B.V. and
Occidental Philippines, Incorporated (collectively SPEX/OXY), as
Contractor, for the exclusive conduct of petroleum operations in the area
known as "Camago-Malampaya" located offshore northwest of Palawan.
Exploration of the area led to the drilling of the Camago-Malampaya natural
gas reservoir about 80 kilometers from the main island of Palawan and
30 kms from the platform. 8
The nearest point of the Camago-Malampaya production area is at a

distance of 93.264 kms or 50.3585 nautical miles to the Kalayaan Island
Group (Kalayaan); 55.476 kms or 29.9546 nm to mainland Palawan (Nacpan
Point, south of Patuyo Cove, Municipality of El Nido); and 48.843 kms or
26.9546 nm to the Province of Palawan (northwest of Tapiutan Island,
Municipality of El Nido). 9
The quantity of natural gas contained in the Camago-Malampaya was

estimated to be sufficient to justify the pursuit of gas-to-power projects
having an aggregate power-generating capacity of approximately 3,000
megawatts operating at baseload for 20 to 25 years. 10
Service Contract No. 38, as clarified by the Memorandum of

Clarification between the same parties dated December 11, 1990, provides
for a production sharing scheme whereby the National Government was
4
Rollo (G.R. No. 185941), pp. 13-58.
5
Penned by Associate Justice Rebecca De Guia-Salvador, concurred in by Associate Justices
Vicente S.E. Veloso andApolinario D. Bruselas, Jr.; id. at 218-224.
6
AUTHORIZING THE USE OF FEES, REVENUES AND RECEIPTS FROM SERVICE
CONTRACT NO. 38 FOR THE IMPLEMENTATION OF DEVELOPMENT PROJECTS FOR THE
PEOPLE OF PALAWAN. Issued on December 1, 2007. Rollo, (G.R. No. 170867), pp. 392-J-392-L.
7
Rollo (G.R. No. 185941), pp. 250-252.
8
Rollo (G.R. No. 170867), pp. 14, 556, 891, 1464-1465; rollo (G.R. No. 185941), p. 17.
TSN, November 24, 2009, p. 15.
9
Rollo (G.R. No. 170867), p. 1465.
10
Id. at 1466.
~
entitled to receive an amount equal to sixty percent (60%) of the net

proceeds 11 from the sale of petroleum (including natural gas) produced from
petroleum operations while SPEX/OXY, as service contractor, was entitled
12
to receive an amount equal to forty percent (40%) of the net proceeds.
The Contractor was subsequently composed of the consortium of

SPEX, Shell Philippines LLC, Chevron Malampaya LLC and Philippine
National Oil Company-Exploration Corporation (PNOC-EC). 13
Administrative Order No. 381
On February 17, 1998, President Fidel V. Ramos issued

Administrative Order (A.O.) No. 381 14 which, in part, stated that the
Province of Palawan was expected to receive about US$2.1 Billion from the
estimated US$8.l Billion total government share from the Camago-
Malampaya natural gas project for the 20-year contract period. 15
On June 10, 1998, DoE Secretary Francisco L. Viray wrote Palawan

Governor Salvador P. Socrates, requesting for the deferment of payment of
50o/o of Palawan's share in the project for the first seven years of operations,
estimated at US$222.89 Million, which it would use to pay for the National
Power Corporation's Take-or-Pay Quantity (TOPQ) obligations under the
latter's Gas Sale and Purchase Agreements with SPEX/OXY. 16
On October 16, 2001, the Camago-Malampaya natural gas project was

inaugurated. 17
Palawan 's Claim
The Provincial Government of Palawan asserted its claim over

forty percent (40%) of the National Government's share in the
proceeds of the project. It argued that since the reservoir is located
within its territorial jurisdiction, it is entitled to said share under Section
11
"Net proceeds" is defined under Section VII, paragraph 7.3 (c) of Service Contract No. 38 as the
difference between the gross income and the sum of the Operating Expenses as defined in Section II,
paragraph 2.19 of the contract. Rollo (G.R. No. 185941), pp. 165 and 182.
12
Third Whereas Clause, Administrative Order No. 381; rollo (G.R. No. 170867), pp. 549 and 556.
13
First Whereas Clause, Executive Order No. 683 issued on December 1, 2007; id. at 392-J.
14
PROVIDING FOR THE FULFILLMENT BY THE NATIONAL POWER CORPORATION OF
ITS OBLIGATIONS UNDER THE AGREEMENT FOR THE SALE AND PURCHASE OF NATURAL
GAS DATED DECEMBER 30, 1997 WITH SHELL PHILIPPINE EXPLORATION B.V./OCCIDENTAL
PHILIPPINES, INC. AND THE COMPLIANCE OF THE NATIONAL GOVERNMENT, THROUGH
THE DEPARTMENT OF FINANCE AND THE DEPARTMENT OF ENERGY WITH ITS
PERFORMANCE UNDERTAKING THEREFOR AND OTHER PURPOSES. Issued on February 17,
1998. Id. at 549-550-A.
15
Fifteenth Whereas Clause, Administrative Order No. 381, paragraph 2; id. at 549-A and 892.
16
Id. at 551-552, 892-893.
17
Id. at 892.
Decision ·s G.R. Nos. 170867 and 185941
290 18 of the Local Government Code. The National Government disputed

the claim, arguing that since the gas fields were approximately 80 kms from
Palawan's coastline, they are outside the territorial jurisdiction of the
province and is within the national territory of the Philippines. 19
Negotiations took place between the National Government and the

Provincial Government of Palawan on the sharing of the proceeds from the
project, with the former proposing to give Palawan 20% of said proceeds
after tax. The negotiations, however, were unsuccessful. On March 14,
2003, in a letter to the Secretaries of the Department of Energy (DoE), the
Department of Budget and Management (DBM) and the Department of
Finance (DoF), Palawan Governor Mario Joel T. Reyes (Governor Reyes)
reiterated his province's demand for the release of its 40o/o share. Attached
to said letter was Resolution No. 5340-03 20 of the Sangguniang
Panlalawigan of Palawan calling off further negotiations with the National
Government and authorizing Governor Reyes to engage legal services to
prosecute the province's claim. 21
Civil Case No. 3779
On May 7, 2003, the Provincial Government of Palawan filed a

petition22 for declaratory relief before the RTC of Palawan and Puerto
Princesa against DoE Secretary Vicente S. Perez, Jr., DoF Secretary Jose
Isidro N. Camacho and DBM Secretary Emilia T. Boncodin (Department
Secretaries), docketed as Civil Case No. 3779. It sought judicial
determination of its rights under A.O. No. 381 (1998), Republic Act (R.A.)
No. 7611 23 or the Strategic Environmental Plan (SEP) for Palawan Act,
Section 290 of R.A. No. 7160 24 or the Local Government Code of 1991
(Local Government Code), and Provincial Ordinance No. 474 25 (series of
2000). It asked the RTC to declare that the Camago-Malampaya natural gas
reservoir is part of the territorial juri.sdiction of the Province of Palawan and
that the Provincial Government of Palawan was entitled to receive 40% of
18
Sec. 290. Amount of Share of Local Government Units. - Local government units shall, in
addition to the internal revenue allotment, have a share of forty percent (40%) of the gross collection
derived by the national government from the preceding fiscal year from mining taxes, royalties, forestry
and fishery charges, and such other taxes, fees, or charges, including related surcharges, interests, or fines,
and from its share in any co-production, joint venture or production sharing agreement in the utilization and
development of the national wealth within their territorial jurisdiction.
19
Rollo (G.R. No. 170867), pp. 14, 894-895.
20
Id. at 128-129.
21
Id. at 15-16, 127-129, 895-896.
22
Id. at 130-158.
23
AN ACT ADOPTING THE STRATEGIC ENVIRONMENT PLAN FOR PALAWAN,
CREATING THE ADMINISTRATIVE MACHINERY TO ITS IMPLEMENTATION, CONVERTING
THE PALAWAN INTEGRATED AREA DEVELOPMENT PROJECT OFFICE TO ITS SUPPORT
STAFF, PROVIDING FUNDS THEREFOR, AND FOR OTHER PURPOSES. Approved on June 19, 1992.
24
AN ACT PROVIDING FOR A LOCAL GOVERNMENT CODE OF 1991.
25
An Ordinance Delineating the Territorial Jurisdiction of the Province of Palawan. Rollo (G.R.
No. 170867), pp. 149 and 972.
~
the National Government's share in the proceeds of the Camago-Malampaya

natural gas project. 26
Commenting on the petition, the Republic maintained that Palawan

was not entitled to the 40% share because the Camago-Malampaya reservoir
is outside its territorial jurisdiction.· It postulated that Palawan's territorial
jurisdiction is limited to its land area and to the municipal waters within
15 km from its coastline. It denied being estopped by the acts of
government officials who earlier acknowledged Palawan's share in the
proceeds of the project. 27
The Interim Agreement
On February 9, 2005, DoE Secretary Vincent S. Perez, Jr., DBM

Secretary Mario L. Relampagos and DoF Secretary Juanita D. Amatong,
with authority from President Gloria Macapagal-Arroyo, executed an
Interim Agreement28 with the Province of Palawan, represented by its
Governor Reyes. The agreement provided for the equal sharing between the
National Government and the Province of Palawan of 40% of (a) the funds
already remitted to the National Government under Service Contract No. 38
and (b) the funds to be remitted to the National Government up the earlier of
(i) the effective date of the final and.executory judgment on the petition by a
court of competent jurisdiction on Civil Case No. 3779, or (ii) June 30,
2010. The parties also agreed that the amount of P600 Million, which was
previously released to the Province of Palawan under E.O. Nos. 254 and
254-A, would be deducted from the initial release of the province's 50o/o
share. Furthermore, the release of funds under the agreement would be
without prejudice to the respective positions of the parties . in any legal
dispute regarding the territorial jurisdiction over the Camago-Malampaya
area. Should Civil Case No. 3779 be decided with finality in favor of either
party, the Interim Agreement treated the share which the prevailing party has
received as financial assistance to the other. 29
The Province of Palawan claims that the National Government failed

to fulfill their commitments under the Interim Agreement and that it has not
received its stipulated share since it was signed. 30
The RTC Rulings in Civil Case No. 3779
On December 16, 2005, the RTC decided Civil Case No. 3779 m
favor of the Province of Palawan, disposing as follows:
26
Id. at 16-17, 130-158.
27
Id. at 89, 92.
28
Id. at 555-561.
29
Id. at 557-559, 896-897.
10
Id. at 897.
'f
Decision ·7 G.R. Nos. 170867 and 185941
WHEREFORE, premises considered, the Court declares that the

province of Palawan is entitled to the 40% share of the national wealth
pursuant to the provisions of Sec. 7, Article X of the 1987 Constitution
and this right is in accord with the provisions of the Enabling Act, R.A.
7160 (The Local Government Code of 1991 ), computed based on revenues
generated from the Camago-Malampaya Natural Gas Project since
October 16, 2001.
IT IS SO ORDERED. 31
The RTC held that it was "unthinkable" to limit Palawan's territorial

jurisdiction to its landmass and municipal waters considering that the Local
Government Code empowered them to protect the environment, and R.A.
No. 7611 adopted a comprehensive framework for the sustainable
development of Palawan compatible with protecting and enhancing the
natural resources and endangered environment of the province. 32
Applying the principles of decentralization and devolution of powers

to local government units (LGUs) as recognized in the 1987 Constitution,
the RTC explained that the State's resources must be shared with the LGUs
if they were expected to deliver basic services to their constfruents and to
discharge their functions as agents of the State in enforcing laws, preserving
the integrity of the national territory and protecting the environment. 33
The RTC rejected the Department Secretaries' reliance on the cases of

Tan v. COMELEC34 and Laguna Lake Development Authority v. CA 35
(LLDA) in arguing that territorial jurisdiction refers only to landmass. The
RTC held that the cases were inapplicable as Tan was an election
controversy involving the creation of a new province while LLDA merely
highlighted the primacy of the said agency's Charter over the Local
Government Code. The 1950 case ·of Municipality of Paoay v. Manaois, 36
where a municipality was declared as holding only a usufruct, not exclusive.
ownership, over the municipal waters, was also held to be inapplicable since
it was rendered before the principle of local autonomy was instituted in the
1987 Constitution and the Local Government Code. 37
The RTC further declared that the Regalian Doctrine could not be
used by the Department Secretaries as a shield to defeat the Constitutional
provision giving LGUs an equitable share in the proceeds of the utilization
and development of national wealth within their respective areas. The
31
Id. at 112.
32
Id. at I09.
33
Id. at 109-110.
34
226 Phil. 624 (1986).
35
321 Phil. 395 (1995).
36
86 Phil. 629 (1950).
37
Rollo (G.R. 170867), p. 111.
'i
doctrine, said the RTC, is subject to this Constitutional limitation and the
40% LGU share set by the Local Government Code. 38
Finally, the RTC noted that from 1992 to 1998, Palawan received a
total of Pl16,343,197.76 from collections derived from the West Linapacan
Oil Fields, and that former President Fidel V. Ramos issued A.O. No. 381
acknowledging Palawan's claim and share in the proceeds of the Camago-
Malampaya project. The RTC, thus, held that by its previous actions and
issuances, the National Government legally acknowledged Palawan's claim
to the proceeds of the Camago-Malampaya project and it was "too late in the
day for [it] to take a 180 degree turn." 39
On December 29, 2005, the Provincial Government of Palawan filed a

motion to require the Secretaries of the DoE, DoF and DBM to render a full
accounting of actual payments made by SPEX to the Bureau of Treasury
from October 1, 2001 to December 2005, and to freeze and/or place
Palawan's 40% share in an escrow account. 40
On January 4, 2006, the aforesaid Secretaries filed an urgent

manifestation asserting that the motion was premature and should not be
heard by the RTC because the Republic still had fifteen (15) days to appeal. 41
The Provincial Government of Palawan countered that pending finality of
the December 16, 2005 Decision, there was a need to secure its 40% share
over which it had a "vested and inchoate right." 42
The RTC subsequently issued an Order which was erroneously dated

December 16, 2006 and later amended to indicate the date as January 16,
2006. 43 The dispositive portion of the Amended Order44 reads:
WHEREFORE, premises considered, the public respondents

individually or collectively DIRECTED within ten (10) days from receipt
of this Order pursuant to a "Freeze Order" hereby granted by this Court:
a. HON. Respondent SECRETARY OF THE DEPARTMENT OF

ENERGY RAPHAEL P.M. LOTILLA
To render a FULL ACCOUNTING of the total gross collections

derived by the National Government from the development and utilization
of Camago-Malampaya national gas project for the period January 2002 to
December 2005, including its conversion to peso denomination and
showing the 40% LGU share and henceforth, submit MONTHLY an
accounting of all succeeding collections until the finality of the decision;
38 Id.
39
Id. at 112.
40
Id. at 17, 113-114.
41
Id. at 17-18.
42
Id. at 113.
43
Id. at 435.
44
Id. at 113-116.
4
b. HON. Respondent SECRETARY OF FINANCE MARGARITO

TEVEZ-
To submit a full report of the actual payments made by Shell Spex

from January 2002 to December 2005 deposited under Special Account
151 of the Bureau of Treasury, Department of Finance, including the dates
when the payments were made, the Official Receipts covering the same
and the present status, particularly the disputed 40% LGU share for
Palawan and to make MONTHLY reports of actual payments received
during the pendency of this case;
c. HON. Respondent SECRETARY DEPARTMENT OF BUDGET

[sic] ROMULO NERI
Effective immediately, NOT TO ISSUE nor CHARGE allotment

release orders, disbursements and cash allocation against the
deposit/account Special Fund 151 corresponding to the 40% LGU share
for the period January 2002 to December 2005 pending the finality of the
decision in this case.
d. ALL RESPONDENTS, collectively or individually, effective

immediately, CEASE and DESIST from USING/DISBURSING the 40%
share of the LGU-Palawan, for any other purpose, except in compliance
with the decision of this Court dated December 16, 2005, under pain of
CONTEMPT, until the finality of the decision;
e. Furthermore, the HON. Respondent Secretary of Finance

Margarito Tevez [sic] and/or his subordinate officer Hon. Omar T. Cruz
Treasurer of the Philippines, to deposit in escrow in the LAND BANK OF
THE PHILIPPINES the fund/deposit to the 40% disputed LGU share,
identified as Special Account 151, and to "freeze" said account, under pain
of CONTEMPT, until finality of the decision or except as directed by this
Court pursuant to the Decision dated December 16, 2005.
The RTC held that the motion for full accounting and freezing of
Palawan's claimed 40% share was actually part of the petition for review
which sought to declare the duties of the National Government and the rights
of the Provincial Government of Palawan, and that a resolution thereof
would guide this Court as to the actual amount due the local government
since it is not a trier of facts. 46 The RTC also noted that the National
Government's track record in complying with the Constitutional provisions
on local autonomy was not exactly immaculate as supposedly evidenced by
the case of Gov. Mandanas v. Hon. Romulo47 where, after sharing with the
Province of Palawan collections from the West Linapacan oil fields from
1992 to 1998, the National Government "turned its back on its legal
commitment to the former." The trial court stressed that the local
45
Id. at 115-116.
46
Id. at 114.
47
4 73 Phil. 806 (2004 ).
{
government of Palawan was merely preempting any possible dissipation of

funds that would render any judgment favorable to it an empty victory. 48
On February 6, 2006, the Department Secretaries filed a motion for

reconsideration49 of the Amended Order dated January 16, 2006. 50
G.R. No. 170867
On February 16, 2006, the Republic, represented by DoE Secretary

Raphael P.M. Lotilla, DoF Secretary Margarito B. Teves and DBM Secretary
Romulo L. Neri, challenged the RTC's December 16, 2005 Decision before
this Court through a petition for review 51 docketed as G.R. No. 170867. In
the same petition, the Republic, in anticipation of the RTC's denial of its
motion for reconsideration, also assailed the January 16, 2006 Amended
Order ad cautelam, ascribing grave abuse of discretion to the RTC for
granting affirmative relief in a special civil action for declaratory relief. 52
On June 6, 2006, the RTC in its Order 53 lifted its January 16, 2006
Order, holding that:
[A] becoming sense of modesty on the part of this Court, compels it to

defer to the Supreme Court's First Division as the Movants have deviously
appealed to the High Court the very issues raised in the Motion for
Reconsideration now pending before this Court. 54
The dispositive portion of the RTC's June 6, 2006 Order, thus, reads:
WHEREFORE, premises considered, the Amended Order dated

January 16, 2006 is hereby LIFTED and SET ASIDE to await final
determination thereof in view of the Petition for Review on Certiorari
filed by Movants in this case directly with the Supreme Court.
Consequently, the Republic manifested to the Court that its ad

cautelam arguments relative to the Amended Order dated January 16, 2006
need no longer be resolved unless the Provincial Government of Palawan
raised the same in its comment. 56
48
Rollo (G.R. No. 170867), p. 115.
49
Id. at 417-432.
50
Id. at 18 and 437.
51
Id. at 9-81.
52
Id. at 18, 21, 437.
53
Id. at 622-625.
54
Id. at 625.
55 ld.
56
Id. at 438.
~
The Provisional Implementation

Agreement
On July 25, 2007, the duly authorized representatives of the National

Government and the Province of Palawan, with the conformity of the
Representatives of the Congressional Districts of Palawan, agreed on a
Provisional Implementation Agreement (PIA) that allowed 50% of the
disputed 40% of the Net Government Share in the proceeds of Service
Contract No. 38 to be utilized for the immediate and effective
implementation of development projects for the people of Palawan. 57
E.O. No. 683
On December 1, 2007, President Gloria Macapagal-Arroyo issued

E.O. No. 683 which authorized the release of funds to the implementing
agencies pursuant to the PIA, without prejudice to any ongoing discussion or
the final judicial resolution of Palawan's claim of territorial jurisdiction over
the Camago-Malampaya area. E.O. No. 683 provided:
SECTION 1. Subject to existing laws, and the usual government

accounting and auditing rules and regulations, the Department of Budget
and Management (DBM) is hereby authorized to release funds to the
implementing agencies (IA) pursuant to the PIA, upon the endorsement
and submission by the DOE and/or the PNOC Exploration Corporation of
the following documents:
1.1. Directive by the Office of the President or written request of

the Province of Palawan, the Palawan Congressional Districts or the
Highly Urbanized City of Puerto Princes[ a], for the funding of designated
projects;
1.2. A certification that the designated projects fall under the

investment program of the Province of Palawan, City of Puerto Princesa,
and/or the development projects identified in the development program of
the National Government or its agencies; and
1.3. Bureau of Treasury certification on the availability of funds

from the 50% of the 40% share being claimed by the Province of Palawan
from the Net Government Share under SC 38;
Provided, that the DBM shall be subject to the actual collections

deposited with the National Treasury, and shall be in accordance with the
Annual Fiscal Program of the National Government.
SECTION 2. The IA to whom the DBM released the funds

pursuant to Section 1 hereof shall be accountable for the implementation
of the projects and the expenditures thereon, subject to applicable laws and
57
Sixth Whereas Clause, Executive Order No. 683 issued on December 1, 2007; id. at 392-J;
<https://www.dbm.gov. ph/wp-content/uploads/Issuances/2008/Joint%20Circular/JC_ N o3/jc_ no3 .pdf>
4
existing budgeting, accounting and auditing rules and regulations. For

recording purposes, the DBM may authorize the IAs to open and maintain
a special account for the amounts released pursuant to this Executive
Order (EO).
SECTION 3. The National government, with due regard to the

pending judicial dispute, shall allow the Province of Palawan, the
Congressional Districts of Palawan and the City of Puerto Princesa to
securitize their respective shares in the 50% of the disputed 40% of the
Net Government Share in the proceeds of SC 38 pursuant to the PIA. For
the purpose, the DOE shall, in consultation with the Department of
Finance, be responsible for preparing the Net Government Revenues for
the period of to June 30, 2010.
SECTION 4. The amounts released pursuant to this EO shall be

without prejudice to any on-going discussions or final judicial resolution
of the legal dispute regarding the National Government's territorial
jurisdiction over the areas covered by SC 38 in relation to the claim of the
Province of Palawan under Sec. 290 of RA 7160.
CA-G.R. SP No. 102247
On February 7, 2008, a petition for certiorari58 questioning the

constitutionality of E.O. No. 683 was filed before the CA by Bishop Pedro
Dulay Arigo, Cesar N. Sarino, Dr. Jose Antonio N. Socrates and Prof. H.
Harry L. Roque, Jr. (Arigo, et al.), as citizens and taxpayers, against
Executive Secretary Eduardo R. Ermita (Executive Secretary Ermita), DoE
Secretary Angelo T. Reyes (DoE Secretary Reyes), DoF Secretary Margarito
B. Teves, DBM Secretary Rolando D. Andaya, Jr., Palawan Governor Reyes,
Representative Antonio C. Alvarez (Alvarez) of the First District ·of
Palawan, Representative Abraham Mitra (Mitra) and Rafael .E. Del Pilar,
President and Chief Executive Officer, PNOC-EC. Docketed as CA-G.R. SP
No. 102247, the petition also asked the CA to: (1) prohibit respondents
therein from disbursing funds allocated under E.O. No. 683; (2) direct the
National Government to release the 40% allocation of the Province ·of
Palawan from the proceeds of the Camago-Malampaya project pursuant to
the sharing formula under the Constitution and the Local Government Code;
and (3) prohibit the parties to the PIA from implementing the same for being
violative of the Constitution and the Local Government Code. 59
In a Resolution dated March 18, 2008, the CA required Arigo, et al. to

submit, within five (5) days from notice, copies of relevant pleadings and
other material documents, namely: ( 1) the petition for review on certiorari,
docketed as G.R. No. 170867, filed before this Court; (2) the RTC's
Decision in Civil Case No. 3779; (3) the motion for reconsideration of said
RTC Decision; (4) the Service Contract No. 38; and (5) the PIA, as required
58
Rollo (G.R. No. 185941 ), pp. 62-96.
59
Id. at 20 and 219.
+
under Section 1, Rule 65, in relation to Section 3, Rule 46 of the Rules of

Court. 60
Arigo, et al. asked for additional ten (10) days to comply with the
Resolution, which the CA granted. They later submitted the required
documents except for the copies of the petition in G.R. No. 170867 and the
PIA. They informed the CA that despite having made a formal request for
said petition, they were unable to secure a copy because they were not
parties to the case. The Third Division's Clerk of Court also informed them
that the records of G.R. No. 170867 were unavailable as the case had already
been submitted to the ponente for resolution. Though unable to obtain a
copy of the PIA, they submitted a copy of Service Contract No. 38 which
they supposedly secured from "unofficial sources." Considering the
difficulty they allegedly encountered in obtaining the documents, they asked
the CA to direct DoE Secretary Reyes and Executive Secretary Ermita to
submit a copy of the petition in G.R. No. 170867 and Service Contract No.
38, respectively. They also asked the CA to require any of the respondents-
officials of the Province of Palawan to submit a copy of the PIA to which
they were supposed to have been signatories. 61
Ruling of the CA
In the CA's Resolution62 dated May 29, 2008, Arigo et al. 's petition for
certiorari was denied due course and dismissed. The CA held that the task
of submitting relevant documents fell squarely on Arigo, et al. as petitioners
invoking its jurisdiction. It added that Arigo, et al. should have submitted a
certification from this Court's Third Division concerning the unavailability
of the records of G.R. No. 170867 and that they could have simply secured a
copy of the PIA from the Malacafiang Records Office as the official
repository of all documents related to the Executive's functions.
The CA also held that apart from its procedural defect, the petition
was also prematurely filed considering that it was anchored on the same
essential facts and circumstances and raised the same issues in G.R. No.
170867. The CA likewise noted that the interim undertaking between the
parties to the PIA was contingent on the final adjudication of G.R. No.
170867. Taking judicial notice of on-going efforts of both legislative and
executive departments to arrive at a common position in redefining the
country's baseline in the light of the United Nations Convention on the Law
of the Sea (UNCLOS), the appeals court further explained that ruling on the
case may be tantamount to a collateral adjudication of the archipelagic
baseline which involved a policy issue. 63
60
Id. at 20-21, 219.
61
Id. at21, 219-220.
62
Id. at 218-224.
63
Id. at 220-223.
~
Arigo, et al. asked the CA to reconsider its May 29, 2008 Resolution
and later submitted an original duplicate of the Resolution 64 dated June 23,
2008 of this Court's Third Division which denied their counsel's request for
certified true copies of certain documents since it was not a counsel for any
party.6s
On December 16, 2008, the CA issued a Resolution66 denying the

motion for reconsideration.
G.R. No. 185941 (Arigo, et al. petition)
On February 23, 2009, Arigo, et al. filed a petition for review on

certiorari67 over the CA's May 29, 2008 and December 16, 2008
Resolutions, arguing that the case was ripe for decision and that the
documents required by the CA were not necessary. 68 They assert anew their
constitutional challenge to E.0. No. 638, claiming that it was in violation of
the mandated equitable sharing of resources between the National
Government and LGUs. 69
Consolidation of Cases
On June 23, 2009, the Court in its Resolution 70 consolidated G.R. No.
185941 with G.R. No. 170867.
Oral Argument
On September 1, 2009 71 and November 24, 2009, 72 the cases were

heard on oral argument. After the parties presented their respective
arguments, the Court heard the opinions of Atty. Henry Bensurto, Jr. (Atty.
Bensurto) of the Department of Foreign Affairs and Dean Raul Pangalangan
of the University of the Philippines as amici curiae.
Remittances under Service Contract No. 38
As of August 31, 2009, the amounts remitted to the DoE under

Service Contract No. 38 are as follows: 73
64
Id. at 249.
65
Id. at 22.
66
Id. at 250-252.
67
Id. at 13-58.
68
Id. at 25.
69
Id. at 14.
70
Id. at 327.
71
Rollo(G.R. No. 170867), pp. 1210-1214.
72
Id. at 1260-1261.
73
Id. at 1466-1467.
~
Year Total Collection

2002 646,333, 100.11
2003 1,475,334,680.12
2004 1,631,245,574.33
2005 2,393,400,010.73
2006 5,369,720,905.73
2007 8,228,450,883. 72
2008 25,498,646,553.39
January 1 to August 31, 2009 15,947,078,304.12
Total 61,190,210,012.25
Based on the aforesaid remittances, the Republic computed the share

claimed by the Province of Palawan (as of August 31, 2009) as follows: 74
Source of Assistance to the LGUs

Year DoE Share75
Palawan's 40%
Total Collection
Claim
2002 10, 113,578.87 636,219,521.24 646,333,100.11
2003 1,475,334,680.12 1,475,334,680.12
2004 1,631,245,574.33 1,631,245,574.33
2005 2,393,400,010.73 2,393,400,010. 73
2006 5,369,720,905.73 5,369,720,905. 73
2007 8,228,450,883.72 8,228,450,883. 72
·2008 15,057,426,163.39 10,441,220,390.00 25,498,646,553 .39
January 1 to
10,600,881,085.36 5,346,197,218.76 15,947,078,304.12
August 31, 2009
Total 25,668,420,827 .62 35,521,789,184.63 61, 190,210,012.25
The Parties' Submissions
Precised, the parties' respective arguments are as follows:
The Republic
1. An LGU's territorial jurisdiction refers only to its land area. 76
1.1.Since Section 7 of the Local Government Code uses

"population" and "land area" as indicators in the creation and
conversion of LGUs, it follows that the territorial jurisdiction is the
land where the people live and excludes seas or marine areas. 77
74
Id. at 1467.
75
From 2002 to 2007, there were no or minimal remittance because of the Take-or-Pay Quantity
(TOPQ) obligation of the National Power Corporation as implemented through Administrative Order No.
381 issued on February 17, 1998. Id.
76
Id. at 22.
11 Id.
4
1.2. In describing the territorial requirement for a province,

Section 461(a)(i) of the Local Government Code speaks of "a
contiguous territory, as certified by the Lands Management Bureau"
while Section 461 (b) of the same law provides that "the territory need
not be contiguous if it comprises two (2) or more islands," indicating
that "territory" is limited to the landmass. 78
1.3. "Territory" as used in Section 461 of the Local

Government Code and "land area" as used in Section 7 of the same
law, must be attested to by the Lands Management Bureau which has
jurisdiction only over land areas. 79
1.4. In Tan, 80 the Court interpreted "territory" to refer only to

the mass of land above sea water and excludes the waters over which
the political unit exercises control. 81 The RTC erred in holding that
Tan is not applicable when it also involved the issue of whether the
province should include the waters around it. Tan applies whether the
purpose is the creation of a province or the determination of its
territorial jurisdiction. 82
2. The area referred to under Section 7, Article X of the 1987

Constitution, which grants LGU s a share in the proceeds of the utilization
and development of national wealth within their respective areas, refers -to
the territorial boundaries of the LGU as defined in its charter and not to its
exercise of jurisdiction. 83
2.1. As examples of such national wealth, members of the

1986 Constitutional Commission referred to natural resources found
inland or onshore, even when offshore explorations were being
conducted years before the Commission was formed. 84
2.2. The Local Government Code provides that the territorial

jurisdiction of municipalities, cities and barangays should be
identified by metes and bounds, thus confirming that "territorial
jurisdiction" refers to the LGU's territorial boundaries. 85
78
Id. at 23.
79 Id.
80
Supra note 34.
81
Id. at 24.
82
Id. at 23-25.
83
Id. at 1473-1474.
84
Id. at 1475-1476.
81
· Id. at 1481 and 1483.
3. The Camago-Malampaya reservoir is outside the territorial

boundaries of the Province of Palawan as defined in its Charter. Under said
Charter, Palawan's territory is composed only of islands. 86
4. On municipal waters:
4.1. As argued in the petition: Assuming an LGU's territory

includes the waters around its land area, the same should refer only to
the municipal waters as defined under Section 13 l(r) of the Local
Government Code and Section 4.58 87 of R.A. No. 8550, 88 otherwise
known as the Philippine Fisheries Code of 1998.89
4.1. l. In defining "municipal waters," Section 13 l(r) of

the Local Government Code only includes marine waters within
fifteen (15) kms from the coastline. Section 4.58 of R.A. No.
8550 gives a similar definition of "municipal waters." 90
4.1.2. Under Sections 6 and 7 of R.A. No. 8550, it is the

Department of Agriculture, through the Bureau of Fisheries and
Aquatic Resources, that has jurisdiction over Philippine waters
beyond the 15-km limit of municipal waters, with respect to the
issuance of license, charging of fees and access to fishery
resources. 91
4.1.3. Section 16 of R.A. No. 8550 provides that the

jurisdiction of a municipal or city government extends only to
the municipal waters, while Section 65 of the same law
provides that the enforcement of laws and the formulation of
rules, except in municipal waters, are vested in the National
Govemment. 92
86
Id. at 1487-1488.
87
Section 4. Definition of Terms. - x x x
xx xx
58. Municipal waters - include not only streams, lakes, inland bodies of water and tidal waters
within the municipality which are not included within the protected areas as defined under Republic Act
No. 7586 (The NIPAS Law), public forest, timber lands, forest reserves or fishery reserves, but also marine
waters included between two (2. lines drawn perpendicular to the general coastline from points where the
boundary lines of the municipality touch the sea at low tide and a third line parallel with the general
coastline including offshore islands and fifteen (15. kilometers from such coastline. Where two (2.
municipalities are so situated on opposite shores that there is less than thirty (30. kilometers of marine
waters between them, the third line shall be equally distant from opposite shore of the respective
municipalities.
88
AN ACT PROVIDING FOR THE DEVELOPMENT, MANAGEMENT AND
CONSERVATION OF THE FISHERIES AND AQUATIC RESOURCES, INTEGRATING ALL LAWS
PERTINENT THERETO, AND FOR OTHER PURPOSES. Approved on February 25, 1998.
89
Rollo (G.R. No. 170867), p. 26.
90
Id. at 26-28.
91
Id. at 28-29, 1559, 1562-1563.
92
Id. at 29-30, 1564.
i
4.1.4.' Thus, the LGUs' authority may be enforced only

within the 15-km limit of the municipal waters. Beyond it,
jurisdiction rests with the National Government through the
Philippine Navy, Philippine Coast Guard, Philippine National
Police-Maritime Command, and the Department of Agriculture
in their respective areas of concern. 93
4.1.5. It was held in Municipality of Paoay94 that a

municipality's right over municipal waters consists merely of
usufruct. Contrary to the RTC's pronouncement, the decision in
said case remains good law since nothing in the 1987
Constitution overthrew the principle that the State owns all
natural resources whether found on land or under the sea. 95
4.1.6. Even assuming that the LGU's territory extends ·to

the municipal waters, the Camago-Malampaya natural gas
reservoir is located approximately 80 kms from mainland
Palawan, thus, way beyond the 15-km radius. 96
4.2. As argued in the Memorandum: Under the Local

Government Code, the 15-km municipal waters and beyond, including
the continental margin, do not' form part of the territory of an LGU. 97
4.2.1. In Tan, the Court excluded from the territory of the

political unit the "waters over which [it] exercises control" or
the municipal waters. 98
4.2.3. The Local Government Code and the Philippine

Fisheries Code did not redefine and extend the territorial
jurisdiction of LGUs to include the 15-km municipal waters.
Instead, they merely granted "extraterritorial" jurisdiction oyer
the municipal waters, which is limited only to the waters,
excluding· the seabed, subsoil and continental shelf; to fishery
and aquatic resources, excluding other resources; and to
revenue generation and regulation of said resources. 99
91
Id. at 30, 1564-1565.
94
Supra note 36.
90
Ro//o(G.R. No. 170867), pp. 30-31, 1566.
96
Id. at 32-33.
97
Id. at 1501-1502.
98
Id. at 1503.
99
Id. at 1556-1557.
~
4.2.4. Other than the 15-km municipal waters, the Local

Government Code did not vest jurisdiction beyond the LGU's
territorial boundaries. 100
5. Under the Archipelagic and Regalian Doctrines enshrined in the

1987 Constitution, the maritime area between Kalayaan and mainland
Palawan belongs to the national territory and does not pertain to any local
government unit. 101
5.1. The fact that a territorial sea belongs to the internal

waters of a coastal State does not necessarily imply that it belongs to
the province or local government closest to it. R.A. No. 3046, entitled
An Act to Define the Baselines of the Territorial Sea of the
Philippines, as amended by R.A. No. 5446, which defines the State's
"internal waters," does not expressly state that the internal waters
should also belong to the LGU. 102
5.2. The Archipelagic Doctrine, as enunciated in the

UNCLOS and affirmed in Article I of the 1987 Constitution, pertains
to the sovereign state and does not place within the territory of LGU s
the waters between and surrounding its islands. Nowhere in
international or domestic law does it state that said doctrine applies in
pari materia to LGU s. 103
5.3. The application of the Archipelagic Doctrine to a

political ·subdivision will encroach on territories that belong to the
State. Section 3 of the Water Code provides that "all waters belong to
the State" and Section 5 of the same law specifies that "seawater
belongs to the State." So also, while the definition of Philippine
waters under the Philippine Fisheries Code acknowledges that waters
may exist in political subdivisions, nothing therein impiies that such
waters form part of the territory of the LGU. Furthermore, said
definition treats the waters connecting the islands as a separate group
from the waters existing in the political subdivisions, implying that
waters between islands are not deemed found in LGUs. 104
5 .4. The Regalian Doctrine, as embodied in Section 2, Article

XII of the 1987 Constitution, is all encompassing; thus, it behooves
the claimant to present proof of title before his right is recognized.
Without a specific and unmistakable grant by the State, the property
remains to be that of the State·and the LGU cannot claim an area to be
100
Id. at 1557.
101
Id. at 34-35.
102
Id. at 36.
103
Id. at I 499-150 I.
104
Id. at 37-38.
't
part of its territorial jurisdiction. Inclusion of any land or water as

part of Palawan's territory must be expressly provided by law and not
merely inferred by vague and ambiguous construction. Statutes in
derogation of authority should be construed in favor of the State and
should not be permitted to divest it of any of its rights or prerogatives
unless the legislature expressly intended otherwise. 105
5.5. In a number of cases involving conflicting claims of the

United States Federal Government and the coastal states over natural
wealth found within the latter's adjoining maritime area, the Supreme
Court of the United States of America (U.S.), applying the Federal
Paramountcy Doctrine, consistently ruled on the fundamental right of
the national government over the national wealth in maritime areas, to
the exclusion of the coastal state. The reason behind the doctrine
equally applies to the conflicting claims between the Philippine
National Government and the Province of Palawan. In fact, there are
more reasons to apply the doctrine in the Philippines since unlike the
individual states of the America which preexisted the U.S., the LGUs
are creations and agents of the Philippine National Government. 106
6. The inclusion of the Kalayaan Group of Islands (Kalayaan) to

the Province of Palawan under Presidential Decree (P.D.) No. 1596 107 did not
ipso facto make the waters between Kalayaan and the main island of
Palawan part of the territorial jurisdiction of Palawan. 108
6.1. There is nothing in P.D. No. 1596, or the charter of

Palawan, Act No. 1396, that states that the waters around Kalayaan
are part of Palawan's territory. P.D. No. 1596 refers to Kalayaan as a
cluster of islands and islets while Act No. 1396 identifies the islands
included in the Province of Palawan. Thus, the areas referred to are
limited to the landmass. Since the Camago-Malampaya reservoir is
not an island, it cannot possibly be covered by either statute. Mqre
importantly, the reservoir is outside the geographical lines mentioned
in said laws. 109 ·
6.2. Absent an express grant by Congress, the Province of

Palawan cannot validly claim that the area between mainland
Palawan and Kalayaan are automatically part of its territorial
jurisdiction. 110
10
' Id. at 38-40, 1530, 1532-1533.
106
Id. at 40-46.
107
DECLARING CERTAIN AREA PART OF THE PHILIPPINE TERRITORY AND
PROVIDING FOR THEIR GOVERNMENT AND ADMINISTRATION. Issued on June 11, 1978.
ioR Rollo (G.R. 170867), pp. 46 and 1498.
109
ld. at47-49 and 1492.
110
Id. at 1499.
~
7. Section 1, Article X of the 1987 Constitution provides that the

territorial and political subdivisions of the Republic are the provinces, cities,
municipalities and barangays. It, however, does not require that every
portion of the Philippine territory be made part of the territory of an LGU. It
was intended merely to institutionalize the LGUs. And even on the
supposition that the Constitution intended to apportion the Philippine
territory to the LGUs, legislation is still needed to implement said provision.
However, no law has been enacted to divide the Philippine territory,
including its continental margin and exclusive . economic zones, to all
LGUs. 111
8. Palawan's territorial boundaries do not embrace the continental

~helf where the Camago-Malampaya reservoir is located. Contrary to Dean
Raul Pangalagan's view, the UNCLOS cannot be considered to have vested
the LGUs with their own continental shelf based on the doctrine of
transformation. The concept of continental shelf under the UNCLOS does
not automatically apply to a province. 112
8.1. A treaty is an agreement between states and governs the

legal relations between nations. And even ifthe UNCLOS were to be
deemed transformed as part of municipal law after its ratification by
the Batasang Pambansa in 1984 under Resolution No. 121, it did not
automatically amend the Local Government Code and the charters of
the LGUs. No such intent is manifest either in the UNCLOS nor
Resolution No. 121. Instead, the UNCLOS, as transformed into our
municipal law, is to be applied verba legis. 113
8.2. Under the express terms of the UNCLOS, the rights and
duties over maritime zones and the continental shelf pertain to the
State, and no provision therein suggests any reference to an LGU. 114
8.3. In other sovereign states such as Canada and the U.S., the
maritime zones were ruled to be outside the LGUs' territorial
jurisdiction. The Federal Paramountcy Doctrine was upheld in four
leading U.S. cases where the claims of various U.S. coastal states over
the marginal and coastal waters and the continental shelf were
rejected. 115
m Id. at 1504-1508.
112
Id. at 1487-1488 and 1511.
113
Id. at 1511-1513.
114
Id. at 1518.
115
Id. at 1519-1520.
{
9. The State is not estopped by the alleged mistakes of its officials

116
or agents.
9 .1. On June 10, 1988, the DoE requested the Province of

Palawan for a seven-year deferment of payment to enable the National
Government to pay a portion of NPC's TOPQ obligations. On
February 17, 1998, President Ramos issued A.O. No. 381 which
projected US$2.1 Billion as Palawan's share from the Camago-
Malampaya project. Although they seem to acknowledge Palawan's
share in the proceeds of the Camago-Malampaya project, they cannot
contravene the laws that delineate Palawan's territorial jurisdiction.
Furthermore, the President has no authority to expand the territorial
jurisdiction of a province as this can only be done by Congress. 117
9.2. In issuing A.O. No. 381, President Ramos made no

misrepresentation as to give rise to estoppel. The statements in said
A.O. were not calculated to mislead the Province of Palawan; they
were not even directed to Palawan. No estoppel can be invoked if the
complaining party has not been misled to his prejudice. There is no
proof that the Province of Palawan sustained injury as a result of a
misrepresentation. 118
9 .3. The doctrine of estoppel should be applied only in

extraordinary circumstances and should not be given effect beyond
what is necessary to accomplish justice between the parties. 119
9.4. The doctrine of estoppel does not preclude the correction

of an erroneous construction by the officer himself, by his successor
in office, or by the court in an appropriate case. An erroneous
construction creates no vested right and cannot be taken as
precedent. 120
9.5. Accordingly, the Province of Palawan cannot rely on the

fact that in 1992, they shared in the proceeds derived from the West
Linapacan oil fields located approximately 76 kms off the western
coastline of Palawan. 121
116
ld. at 49.
117
Id. at 49-50.
118
Id. at 1576-1577 and 1579.
119
Id. at 1580.
120
Id. at 51 and 1580-1581.
121
Id. at 52.
~
Decision 23 · G.R. Nos. 170867 and 185941
9.6. The public funds available for various projects in other

provinces would be significantly reduced if Palawan is allowed to
receive its claimed 40% share in the Camago-Malampaya project. 122
10. Ordinance No. 474, series of 2000, enacted by the Sangguniang

Panlalawigan of Palawan and delineating the territorial jurisdiction of the
province to include the Camago-Malampaya area, is ultra vires. 123
10.1. Ordinance No. 474 conflicts with the Charter of the

Province of Palawan as it expanded the boundaries of the province
and included the area between its constituent islands. It is also in
conflict with the limits of LGUs' rights over marine areas under the
Local Government Code, the Fisheries Code and other pertinent
laws. 124
10.2. An LGU cannot fix its territorial jurisdiction, or limit or

expand the same through an ordinance. Pursuant to Section 10,
Article X of the 1987 Constitution and Sections 6 and 10 of the Local
Government Code, only Congress can create, divide or merge LGU s
and alter their boundaries, subject to the plebiscite requirement. An
ordinance cannot contravene the Constitution or any statute. 125
10.3. As plotted by the National Mapping and Resource

Information Authority (NAMRIA), the territorial boundaries of
Palawan under Ordinance No. 474 appear to be inconsistent with the
delineation of the Philippine territory under the Treaty of Paris. 126
11. Section 3(1) ofR.A. No. 7611 or SEP forPalawanAct contains

a definition of "Palawan." The Camago-Malampaya reservoir is
undoubtedly within the area described and plotted on the map. However,
R.A. No. 7611 did not redefine Palawan's territory or amend its charter. 127
11.1. With the words "(A)s used in this Act," Section 3 of R.A.
No. 7611 limited the application of the definitions therein to said law
which was enacted to promote sustainable development goals for the
province through proper conservation, utilization and development of
natural resources. 128
122
Id. at 52 and 1579-1580.
123
Id. at 52.
124
Id. at 1552.
125
Id. at 54-56, 1548-1551.
126
Id. at 56-57.
127
Id. at 60 and 1533-1534.
128
Id. at 153 5.
~
Decision .24 G.R. Nos. 170867 and 185941
11.2. Just like Palawan's Charter, Section 3(1) of R.A. No.

7 611 limited the territory to the islands and islets within the area. 129
11.3. The metes and bounds under Section 3(1)' of R.A. No.
7611, when plotted on the map, excluded portions of mainland
Palawan and several islands, municipalities or portions thereof. 130
11.4. The basis of the description of Palawan is unclear and

there is no record that the alteration in Palawan's boundaries complied
with Section 10, Article X of the 1987 Constitution which requires
that the alteration be in accordance with the criteria established in the
local government code and approved by a majority of the votes cast in
a plebiscite in the political unit(s) directly affected. 131
11.5. Based on the Declaration of Policy in R.A. No. 7611, the

object of the law is not to expand the territory of Palawan but to make
the province an agent of the National Government in the protection of
the environment. There is nothing in the title of the law or any of its
provisions indicating that there was a legislative intent to expand or
alter the boundaries of the province or to remove certain
municipalities from its territory. 132
11.6. If the description of Palawan under R.A. No. 7611 would

be read as a new definition of its territory, it would be unconstitutional
because the title .of the law does not indicate that boundaries would be
expanded, in contravention of the Constitutional requirement that
every bill must embrace only one subject to be expressed in its title. 133
Even if the term "territorial jurisdiction" were to be

11. 7.
understood as including the grant of limited extraterritorial
jurisdiction, the Camago-Malampaya reservoir remains to be beyond
Palawan's jurisdiction under R.A. No. 7611. The said law did not
expand the province's police or administrative jurisdiction; it did not
impose any additional function or jurisdiction on the Province of
Palawan. If anything, the SEP limited the province's governmental
authority since all LGUs in the area must align their projects and
budgets with the SEP. Furthermore, tasked to implement the SEP
was not the province but the Palawan Council for Sustainable
Development (PCSD), a national agency created under the law,
composed of both national and local officials. The participation of
local officials did not tum PCSD into an arm of the Province ·of
129
Id. at 62 and 1535.
110
Id. at 1535.
111
Id. at 60-61 and 1535.
112
Id. at 62 and 1535-1536.
rn Id.
~
Palawan; their inclusion is to allow a holistic view of the

environmental issues and opportunities for coordination. 134
12. A.O. No. 381 was not issued to redefine Palawan's territory; its
title precisely states that it was issued to provide for the fulfillment by the
National Power Corporation of its obligations under the December 30, 1997
Agreement for .Sale and Purchase of Natural Gas with SPEX/OXY and for
the compliance of the National Government's performance undertaking.
Palawan was mentioned but not in the context of redefining its territory.
Only a statute can expand the territory or boundaries of an LGU. 135
13. Sections 465 and 468 of the Local Government Code which
respectively authorize the Provincial Governor to adopt measures to
safeguard marine resources of the province and the Sangguniang
Panlalawigan to impose penalties for destructive fishing, did not give the
provinces government authority over marine resources beyond the municipal
waters. 136
14. Palawan's Claim that it exercises jurisdiction over the Camago-

Malampaya area is bereft of credible proof. Absent a law which vests LGUs
jurisdiction over areas outside their territorial boundaries, its acts over the
Camago-Malampaya area are ultra vires or at most an exercise of
extraterritorial jurisdiction. 137
15. The proposition of the amici curiae that the principle of equity
justifies granting Palawan 40% of the government's share in the Camago-
Malampaya project, may set a dangerous precedent. Furthermore, the
principle of equity cannot be applied when there is a law applicable to the
case. Applicable to the instant case are Section 7, Article X of the 1987
Constitution and Section 290 of the Local Government Code based on which
the Province of Palawan is not entitled to share in the proceeds of the
Camago-Malampaya project. 138
15.1. The concerns of the amici curiae appear to rest on the

possible damage to the environment surrounding Palawan. However,
this eventuality is covered by the Contractor's obligations under the
Environmental Compliance Certificate (ECC) which required SPEX
to ensure minimal impact on the environment and to provide for an
Environmental Guarantee Fund to cover expenses for environmental
monitoring and to compensate for whatever damage that may be
caused by the project. 139
134
Id. at 1567-1570.
135
Id. at 1536-1538.
136
Id. at 1572-1574.
137
Id. at 1473.
138
Id. at 1582-1583.
139
Id. at 1584.
~
16. The PIA and E.O. No. 683 do not constitute evidence of the
Republic's admission that Palawan is entitled to the proceeds of the
Camago-Malampaya project. In civil cases, an offer of compromise is not
admissible in evidence against the offeror. Furthermore, the whereas clauses
of E.O. No. 683 clearly show that the President issued the E.O. based on a
"broad perspective of the requirements to develop Palawan as a major
tourism destination" and Section 25 of the Local Government Code which
authorizes the President, on the LGU's request, to provide financial
assistance to the LGU. The E.O. also expressly states that the amounts
released shall be without prejudice to the final resolution of the legal dispute
between the National Government and the Province of Palawan regarding
the latter's claimed share under the Service Contract No. 38. 140
17. The National Government has no intention to deprive the

Province of Palawan a share in the proceeds of the Camago-Malampaya
project if were so entitled. 141
18. The RTC committed grave abuse of discretion when it issued

Amended Order dated January 16, 2006 because it granted affirmative relief
in a special civil action for declaratory relief. 142
18. 1. While courts have the inherent power to issue

interlocutory orders as may be necessary to carry its jurisdiction into
effect, such authority should be exercised as necessary in light of the
jurisdiction conferred in the main action. In this case, the main action
is one for declaratory relief, which is a preventive and anticipatory
remedy designed to declare the parties' rights or to express the court's
opinion on a question of law, without ordering anything to be done. 143
19. Arigo, et al. have no legal standing to question E.O. No. 683
either as citizens or as taxpayers since they have not shown any actual ·or
threatened injury or that the case involves disbursement of public funds in
contravention of law. 144
20. G.R. No. 185941 is not ripe for judicial adjudication

considering that there is still no final determination as to whether the
Province of Palawan is entitled to share in the proceeds of the Camago-
Malampaya project. Also, the interim undertaking of the parties under the
PIA is contirigent on the final adjudication of G.R. No. 170867.
140
Id. at 1588-1590.
141
Id. at 1590.
142
Id. at 63-65.
143
Id. at 66 and 72, citing Westminster High School v. Bernardo, 51 O.G. 6245.
144
Rollo (G.R. No. 185941 ), pp. 299-300.
~
Furthermore, the validity and manner by which the funds were realigned
under E.O. No. 683 could not be questioned since they are considered as
financial assistance subject to the discretion of the President pursuant to the
authority granted by Section 25(c) of the Local Government Code. 145
Arigo, et al.
1. Their petition was not prematurely filed. While the interim

undertaking between the National Government and the Province of Palawan
under the PIA was contingent on the final adjudication of G.R. No. 170867,
disbursements of public funds would ensue or were already taking place in
violation of the provisions of the Constitution and the Local Government
Code on the equitable sharing of national wealth between the National
Government and the LGUs. 146 ·
2. Neither Governor Reyes nor Representatives Alvarez and Mitra

had the authority to sign the PIA on behalf of the cities, municipalities and
barangays of Palawan. In fact, the cities, municipalities and barangays have
a bigger share that the Provincial Government in the allocation of the
revenues from the Camago-Malampaya project. Under Section 292 of the
Local Government Code, the city or municipality gets 45% and the barangay
gets 35%, or a combined share of 80% as against the Province's share of
only 20%. Governor Reyes and Representatives Alvarez and Mitra l:ould
not sign the PIA as if_ they were the sole recipients of the proceeds of the
Camago-Malampaya project. 147
3. The PIA reduces the share of Palawan's LGUs in two ways:

first, by making "net proceeds" the basis for sharing instead of "gross
collection" as provided by Section 290 of the Local Government Code; and
second, by cutting down the LGUs' equitable share in such proceeds by half,
with the Provin~e solely claiming such allocation. 148
4. The equitable share of LGUs in the utilization and development

of national wealth is not subject to compromise. 149
5. The PIA requires that any fund allocation is subject to the prior
approval of the DoE and/or the PNOC-EC and to actual collections
deposited with the National Treasury, in contravention of the Local
Government Code, which requires that the proceeds of the utilization of
natural resources should be directly released to each LGU without need ·of
145
Id. at 303-305.
146
Id. at 26 and 589.
147
Id. at 29 and 591.
148
Id. at 29-30 and 592.
149
Id. at 30 and 592.
/
~
further action, and the Court's ruling in Pimentel, Jr. v. Hon. Aguirre 150 on
the automatic · release of the LGUs' shares in the National Internal
Revenue. 151
6. In providing that only those projects identified by the Office of

the President, or the Province of Palawan, or the Palawan Congressional
Districts, or the Highly Urbanized City of Puerto Princesa, may be funded,
the PIA violates the intent of the Local Government Code to grant autonomy
to LGUs. 152
7. The PIA allows the securitization of the shares of the LGUs and
the National Government in the utilization of the Camago-Malampaya Oil
and Gas resources, but the National Government cannot securitize what it
does not own legally and neither can the Province of Palawan securitize
what it does not fully own. 153
8. E.O. No. 683 is nothing more than a realignment of funds

carried out in .violation of the Constitutional provision giving LGUs an
equitable share in the proceeds of the utilization of national wealth, for in
usual budgeting procedures of Congress, such share should be included in
the appropriation for "Allocation to LGUs" which is classified as a
mandatory obligation of the National Government and automatically
released to the LGUs. 154
9. E.O. No. 683 is a usurpation of the power of the purse lodged in

Congress under Section 29(1) and (3), 155 Article VI of the 1987 Constitution.
Since the proceeds from the Camago-Malampaya project is the production
share of the government in a service contract, it cannot be disbursed without
an appropriation law. 156
10. E.O. No. 683 fails to consider its implications on the country's
claim to an Extended Continental Shelf (ECS) under the UNCLOS III
regime. The best way to claim an ECS is to consider the Camago-
Malampaya area and the Kalayaan tb be part of Palawan 's continental shelf.
150
391 Phil. 84 (2000).
151
Rollo (G.R. No. 185941 ), pp. 30-31, 592-593
152
Id. at 30 and 593.
153
Id. at 31 and 593.
154
Id. at 33 and 595.
155
SECTION 29.
(I) No money shall be paid out of the Treasury except in pursuance of an appropriation made by
law.
xx xx
(3) All money collected on any tax levied for a special purpose shall be treated as a speci:il fund
and paid out for such purpose only. If the purpose for which a special fund was created has been
fulfilled or abandoned, the balance, if any, shall be transferred to the general funds of the
Government.
156
Rollo (G.R. No. 18594.1), p. 601.
One basis for the Philippine claim to Kalayaan is that it constitutes a natural
prolongation of Palawan 's land territory. 157
11. The Republic's invocation of U.S. case law to dispute the

LGUs' entitlement under Section 7, Article X of the 1987 Constitution is
inappropriate and odd for a unitary state like the Philippines. Said provision
in the unitary Philippine state only means that the entitlement exists only
because of a constitutional grant and not because the LGUs have
sovereignty and jurisdiction in their respective areas distinct from the
Republic 's. 158
12. The definition of "municipal waters" under applicable laws is

irrelevant. The Camago-Malampaya reservoir is located in the continental
shelf which, under Article 76 of the UNCLOS, pertains to the seabed and
subsoil as the natural prolongation of the landmass. 159
13. The constitutionality of E.0. No. 683 may be resolved without

reference to the conflicting territorial claims in G.R. No. 170867. In making
reference to said case, they merely meant to provide a historical backdrop to
the issuance of E.O. No. 683. It is for this reason that they attached only a
copy of E.O. No. 683 to their petition. 160
14. R.A. No. 7611 and A.O. No. 381 both recognize that the
Camago-Malampaya area falls with the continental shelf of Palawan. As
regards the Republic's contention that R.A. No. 7611 is illegal for having
redrawn the boundaries of the Province of Palawan without a plebiscite, the
same ignores the fact that R.A. No. 7611 only incorporates the continental
shelf regime found in Article II of the 1987 Constitution. A plebiscite was
unnecessary because the 1987 Constitution was overwhelmingly ratified. 161
15. The CA erred in dismissing CA-G.R. SP No. 102247 in

deference to executive and legislative deliberations on the country's
baselines as it is in violation of its constitutional duty to interpret the
constitutional provisions defining the national territory. Furthermore, until
revoked or amended, the country's existing law on baselines (R.A. No. 3046
as amended by R.A. No. 5446) remains good law. 162
16. The CA erred in dismissing their action for certiorari for failure
to submit a copy of the PIA considering that the terms of E.O. No. 683
embody all the provisions of the assailed PIA. It was also unnecessary to
submit a copy of the petition in G.R. No. 170867 as it was only tangential to
157
Id. at 37-38, 42-43, 581, 586-587.
158
Id. at 599-600.
159
Id. at 602.
160
Id. at 34 and 596.
161
Id. at 603-604.
~
162
Id. at 36-37, 597-598.
the resolution of the case. Furthermore, the alleged failure to submit said
documents has been mooted by the June 23, 2008 Resolution of the Court's
Third Division indicating that non-parties could not have access to the
records of G.R. No. 170867. At any rate, the records of said case are now a
matter of judicial notice to this Court. 163
The Province of Palawan
1. Section 7 of the Local Government Code, on the creation and

conversion of LGUs, does not expressly provide that an LGU's territorial
jurisdiction refers only to its land area. 164
1.1. Land area is included as one of the requisites for the

creation or conversion of an LGU because evidently, no LGU can be
created out of the maritime area alone. 165
1.2. Another requisite - population - is determined as the total

number of inhabitants within the territorial jurisdiction of the LGU.
The law thus aptly uses the phrase "territorial jurisdiction" instead of
territory or land area since there are communities that live in coastal
areas or low-water areas that form part of the sea. If a local
government's territorial jurisdiction is limited to its land area, then
these communities will not belong to any LGU. 166
2. Section 461 of the Local Government Code does not define the
territorial jurisdiction of a province. It merely specifies the requisites for the
creation of a province. In fact, said provision shows that territory and
population are alternative requirements for the creation of a new province,
with income being the indispensable requirement. It does not necessarily
exclude the maritime area over which a province exercises control and
authority, but merely provides that to determine whether an area is sufficient
to constitute a province, only the landmass or land territory shall be
included. 167
3. In Tan, which involves the creation of a province under the old

Local Government Code, the Court held that the word "territory" as used in
said law "has reference only to the mass of land area and excludes the waters
over which the political unit exercises control." This ruling affirms that an
LGU exercises control over waters, making them part of the political unit's
territorial jurisdiction. Furthermore, Tan only defines the word "territory" as
used in Section 197 of the old Local Government Code. In convoluting the
163
Id. at 49-50 and 605.
164
Rollo (G.R. No. 170867), p. 907.
165
Id. at 908.
~
166
Id. at 908-908-A.
167
Id. at 909-910.
words "territory" and "territorial jurisdiction," the Republic misapplied the

doctrine laid out in Tan. 168
4. Section 7, Article X of the 1987 Constitution provides that the

LGU is "entitled to an equitable share in the proceeds of the utilization and
development of the national wealth within their respective areas, in the
manner provided by law x x x." The provision does not state "within their
respective land areas." The word "area" should accordingly be construed in
its ordinary meaning to mean a distinct part of the surface of something. It,
therefore, encompasses land, maritime area and the space above them. 169
5. The delineation of the territorial jurisdiction by metes and

bounds is required only for landlocked LGUs. 170
6. Limiting the LGU's territorial jurisdiction to its land area is

inconsistent with the State's policy of local autonomy as enshrined in
Section 25, Article II of the 1987 Constitution and amplified in Section 2 of
the Local Government Code. Extending such jurisdiction to all areas where
the Province of Palawan has control or authority will give it more resources
to discharge its responsibilities, particularly. in the enforcement of
environmental laws in its vast marine area. 171
7. Numerous provisions of the Local Government Code indicate

that an LGU's territorial jurisdiction includes the maritime area. Section 138
speaks of public waters within the territorial jurisdiction of the province.
Section 465(3)(v) authorizes the Provincial Governor to adopt adequate
measures to safeguard and conserve the province's marine resources.
Section 468(1 )(vi) empowers the Sangguniang Panlalawigan to protect the
environment and impose appropriate penalties for acts that endanger it, such
as dynamite fishing. More importantly, Section 3, which provides for the
operative principles of decentralization and local autonomy, states that the
vesting of duties in the LGU shall be accompanied with provision for
reasonably adequate resources to effectively carry them out. When the same
provision speaks of ecological balance which the LGUs shall manage with
the National Government, it encompasses the maritime area. 172
7.1. The environmental impact that the Camago-Malampaya

project may have on the people of Palawan requires that the Province
of Palawan must equitably share in its proceeds so it can have
adequate resources to ensure that the extraction of natural gas will not
have a deleterious effect on its environment. 173
168
Id. at 910-911.
169
Id. at 912-914, 1380-1381.
170
Id. at 1381-1382.
~
171
Id. at 915-916 and 1382.
172
Id. at 916-918, 1383-1385.
173
Id. at 919.
8. The Provincial Government of Palawan exercises

administrative, environmental and police jurisdiction over public waters
within its territorial jurisdiction, including the Camago-Malampaya
reservoir. Local police, under the supervision of local executives, maintain
peace and order over the said area. Crimes committed therein are filed and
tried in Palawan courts. The provincial government also enforces local and
national environmental laws over this area. In fact, SPEX consistently
recognized Palawan as the location of the project, having obtained the
necessary endorsement from the Sangguniang Panlalawigan of Palawan
before starting its operations, in accordance with Sections 26 and 27 of the
Local Government Code. Furthermore, the plant, equipment and platform of
SPEX, situated offshore, were declared for tax purposes with the Province of
Palawan. 174
9. Based on the Senate deliberations on the Local Government

Code, it is a foregone conclusion that the Province of Palawan has equitable
share in the proceeds of the Camago-Malampaya project. 175
10. Under Section 5(a) of the Local Government Code, any

question on a particular provision of law on the power of an LGU shall be
liberally construed, and any doubt shall be resolved, in favor of the LGU. 176
11. Neither the Local Government Code nor the Philippine

Fisheries Code provides that beyond the land area, the LGU's territorial
jurisdiction can extend only up to the 15-km stretch of municipal waters. 177
11.1. The definition of "municipal waters" in Section 131 (r) of

the Local Government Code shall be used only for purposes of local
government taxation inasmuch as it is found under Title I of Book II
on Local Taxation and Fiscal Matters. Section 131 (r) also indicates
that the definition applies when the term "municipal waters" is used in
Title I which refers to Local Government Taxation. If anything, the
definition bolsters the argument that the LGU's territorial jurisdiction
extends to the maritime area. 178
11.2. The Philippine Fisheries Code did not limit or define the
territorial jurisdiction of an LGU. The definition of "municipal
waters" under both this law and the Local Government Code was
intended merely to qualify the degree of governmental powers to be
exercised by the coastal municipality or city over said waters. 179
174
Id. at 919-920 and 1386.
175
Id. at 921.
176
Id. at 922 and 1389.
177
Id. at 922-926 and 1389.
178
~
Id. at 924-925, 1389-1390, 1392.
179
Id. at 922-923.
11.3. Palawan is composed of 1, 786 islands and islets. Twelve

(12) out of its twenty-three (23) municipalities are island
municipalities. Between them are expansive maritime areas that
exceed the 15-km municipal water-limit. It will, thus, be inevitable
for the province to exercise governmental powers over these areas. If
Palawan will be authorized to enforce laws only up to the municipal
water-limit, it will be tantamount to a duplication of functions already
being performed by the component municipalities. It will also render
the province inutile in enforcing laws in maritime areas between these
municipalities. It was not the intention of the lawmakers, in enacting
the Local Government Code, to create a vacuum in the enforcement of
laws in these areas or to disintegrate LGUs. 180
12. Laws other than the Local Government Code recognize that the
Province of Palawan has territorial jurisdiction over the maritime area
beyond the municipal waters. 181
12.1. R.A .. No. 7611 defines Palawan as comprising islands

and islets and the surrounding sea, which includes the entire coastline
up to the open sea. 182
12.1.1. Based on the coordinates of Palawan provided in

Section 3(1) of R.A.· No. 7611, the Camago-Malampaya
reservoir is within the territorial jurisdiction of the province. 183
12.1.2. R.A. No. 7611 did not alter the territorial

jurisdiction of Palawan, as provided in Section 37 of its charter,
Act No. 2711. R.A. No. 7611 merely recognized the fact that
the islands comprising Palawan are bounded by waters that
form part of its territorial jurisdiction. Palawan 's · area as
described in said law could be called the province's
"environmental jurisdiction." 184
12.1.3. Pursuant to R.A. No. 7611, the Palawan Council

for Sustainable Development (PCSD) shall establish a graded
system of protection and development control over the whole of
Palawan, including mangroves, coral reefs, seagrass beds and
the surrounding sea. 185
180
Id. at 926, 1393-1394.
181
Id. at 927.
182
Id. at 927 and 1394.
183
Id. at 972, 1397-1398.
184
Jd. at 973-974, 1397, 1400.
185
Id. at 1397.
'f
12.1.4. R.A. No. 7611 encompasses the entire ecological

system of Palawan, including the coastal and marine areas
which it considers a main component of the Environmentally
Critical Areas Network. 186
12.1.5. Local government officials of Palawan have

representations in PCSD, the agency tasked to enforce the
integrated plan under R.A. No. 7611. Since the enforcement of
environmental laws is a joint obligation of the national and
local governments, with local communities being the real
stakeholders, LGUs should benefit from the proceeds of the
natural wealth found in their territorial jurisdictions. 187
12.1.6. The Republic's attempt to remove the Camago-

Malampaya area from the Province of Palawan is contrary to
the declared state policy of adopting an integrated ecological
system for Palawan under R.A. No. 7611. 188
12.2. A.O. No. 381 explicitly declared that the Camago-

Malampaya reservoir is located offshore ·northwest of Palawan and
that the Province of Palawan was expected to receive about US$2. l
Billion from the total gove1nment share of US$8. l Billion out of the
proceeds from the Camago-:Malampaya project. 189
12.3. P.D. No. 1596 declared Kalayaan as a distinct and

separate municipality of the Province of Palawan. In delineating
Kalayaan's boundaries, P.D. No. 1596 included the seabed, subsoil,
continental margin and airspace. 190
12.3.1. P.D. No. 1596 states that the Republic's claim to

Kalayaan is foremost based on the fact that said group of
islands is part of the Philippine archipelago's continental
margin which includes the continental shelf. The continental
shelf is the submerged natural prolongation of the land territory
and is an integral part of the landmass it is contiguous with. Oil
and gas are found not in the waters off Palawan but in the
continental shelf which is contiguous to and a prolongation of
the landmass of Palawan. 191
186
Id. at 1399.
187
ld. at 974.
188
Id. at 958 and 1400.
189
Id. at 928.
190
Id. at 928 and 1394.
~
191
Id. at 950-951.
13. The Province of Palawan cannot be said to be holding a mere

usufruct over the municipal waters based on the 1950 case of Municipality
of Paoay. Said case is not applicable as it was decided when there was a
concentration of powers and resources in the national government, unlike the
decentralized system espoused in the Local Government Code. 192
14. The federal paramountcy doctrine is a constitutional law

doctrine followed in federal states, particularly in the U.S. and Canada. The
application of this doctrine to the Philippine setting is legally inconceivable
because the Philippines has not adopted a federal form of government.
Furthermore, most of the states in the U.S. were previously independent
states who were obliged to surrender their sovereign functions over their
maritime area or marginal belt to the federal government when they joined
the federal union. Contrarily, the Philippines had a unitary system of
government until it adopted the ideas of decentralization and local autonomy
as fundamental state principles. Instead of different states surrendering their
imperium and dominium over the maritime area to a federal government, the
Philippine setting works in the opposite as the National Government, which
is presumed to own all resources within the Philippine territory, is mandated
to share the proceeds of the national wealth with the LGUs. 193
15. The Republic is divided into political and territorial

subdivisions. Thus, for a territory to be part of the Republic, it must belong
to a political and territorial subdivision. These subdivisions are the
provinces, cities, municipalities and barangays, and they are indispensable
partners of the National Government in the proper and efficient exercise of
governmental powers and functions. The Camago-Malampaya reservoir,
which is part of the Philippines, must necessarily belong to a political and
territorial subdivision. That subdivision is the Province of Palawan which
has long been exercising governmental powers and functions over the
area.194
15.1. Since the Camago-Malampaya reservoir is nearest to the

Province of Palawan than any other LGU, it is imperative that the
province becomes the National Government's co-protector and co-
administrator in said maritime area. 195
15.2. Under Section 25(b) of the Local Government Code,

national agencies are to coordinate with LGUs in planning and
implementing national projects, while under Section 3(i) of the same
law, LGUs shall share with the National Government the
192
Id. at 929-930.
193
Id. at 937-938.
194
~
Id. at 940-944 and 1373.
195
Id. at 1377.
responsibility of maintaining ecological balance within their territorial

jurisdiction. Thus, governmental powers are not solely exercised by
the National Government but are shared with LGUs. However, they
cannot be effective partners of the National Government without
sufficient resources. For this reason, the 1987 Constitution grants
them an equitable share in the proceeds of the utilization of national
wealth. 196
15.3. Numerous cases of illegal fishing, poaching and illegal

entry have been committed within the waters surrounding Palawan,
particularly westward of mainland Palawan and bound by the South
China Sea, along the same area where the Camago-Malampaya
project is located. These cases were prosecuted and tried before the
courts of Palawan. In Hon. Roldan, Jr. v. Judge Arca, 197 an illegal
fishing case, the jurisdiction of the Court of First Instance of Palawan
was upheld given that the vessels seized were engaged in prohibited
fishing within the territorial waters of Palawan, in obedience to the
rule that the place where a criminal offense was committed not only
determines the venue of the case but is also an essential element of
jurisdiction. 198
15.4. Sections 26 and 27 of the Local Government Code

require mandatory consultation with the LGUs concerned and the
approval of their respective Sanggunian before the National
Government may commence any project that will have an
environmental impact. The National Government and SPEX
recognized Palawan's jurisdiction over the Camago-Malampaya area
when it requested the indorsement of the Sangguniang Panlalawigan
of Palawan before commencing the Camago-Malampaya project, and
when SPEX obtained an ECC in compliance with the requirement of
PCSD, an agency created by R.A. No. 7611. 199
15.5. In the implementation of tariff and customs laws, the

Province of Palawan is being referred to by the Bureau of Customs as
the place of origin of the barrels of condensate (crude oil) being
exported to Singapore from the Camago-Malampaya area. Export
Declarations for said condensate, as issued by the Department of
Trade and Industry, also showed Palawan as the place of origin. 200
196
Id. at 1377-1379.
197
160 Phil. 343 (1975).
198
Rollo (G.R. No. 170867), p. 941.
~
199
Id. at 942-943.
200
Id. at 943-944.
15.6. In Tana v. Socrates, 201 the Court upheld the ordinances,

passed by the Sangguniang Panlalawzgan of Palawan and the
Sangguniang Panlungsod of the City of Puerto Princesa, which
banned the transport of live fish to protect their seawater and corals
from the effects of destructive fishing, in recognition of the LGUs'
power and duty to protect the right of the people to a balanced
ecology. The destructive way of catching live fish had been
conducted not just within the 15-km municipal waters of Palawan but
also beyond said waters. 202
16. Palawan's claim is not inconsistent with, but upholds, the

archipelagic and regalian doctrines enshrined in the 1987 Constitution. 203
16.1. The Province of Palawan agrees that all waters within the
Philippine archipelago are owned by the Republic. The issue in this
case, however, is not the ownership of the Camago-Malampaya
reservoir. The Province of Palawan is not claiming dominion over
said area. It merely contends that since the reservoir is located in an
area over which it exercises control and shares in the National
Government's management responsibility, it is only just and equitable
that the Province of Palawan should share in the proceeds generated
from its utilization. Furthermore, the law does not require that the
LGUs should own the area where the national wealth is located before
they can share in the proceeds of its use and development; it merely
requires that the national wealth be "found within their respective
areas." It is, thus, error for the Republic to assert that the Camago-
Malampaya area is not part of Palawan's territorial jurisdiction
because it belongs to the State. Otherwise, no LGU will share in the
proceeds derived from the utilization and development of national
wealth because the State owns it under the regalian doctrine. 204
17. International law has no application in this case. While the

UNCLOS establishes various maritime regimes of archipelagos like the
Philippines, nothing therein purports to govern internal matters such as the
sharing of national wealth between its national government and political
subdivisions. 205
18. The State has long recognized the fact that the Camago-
Malampaya area is part of Palawan. 206
201
343 Phil. 670 (1997).
202
Rollo (G.R. No. 170867), pp. 955-958.
203
Id. at 939.
204
Id. at 945-948.
205
Id. at 1403-1404.
206
~
Id. at 959.
18.1. Palawan was allotted P38,110,586.00 as its share in the

national wealth based on actual 1992 collections from petroleum
operations in the West Linapacan oil fields, situated offshore, about
the same.distance from mainland Palawan as the Camago-Malampaya
reservoir. Furthermore, from 1993 to 1998, DBM consistently
released to Palawan its 40% share from the West Linapacan oil
production. Because these are lawful executive acts, the Republic
may not invoke the rule that it cannot be placed in estoppel by the
mistakes of its agents. 207
18.2. Jurisprudence holds that estoppels against the public,

which are little favored, must be applied with circumspection and
only in special cases where the interests of justice clearly require ·it.
To deprive Palawan of its constitutional right to a just share in the
national wealth will indisputably work injustice to its people and
generations to come. As it is, developmental projects have been
adversely stunted as a result of the National Government's withdrawal
of its commitment to give Palawan its 40% share. 208
18.3. It has been held that the contemporaneous construction of

a statute· by the executive officers of the government is entitled to
great respect and unless shown to be clearly erroneous, should
ordinarily control the construction of the statute by the courts. 209
19. Ordinance No. 474 (series of 2000), which the Sangguniang

Panlalawigan of Palawan enacted to delineate the territorial jurisdiction of
the Province of Palawan, including therein the Camago-Malampaya area, is
valid. Laws, including ordinances, enjoy the presumption of
constitutionality. Moreover, there is no flaw in the Ordinance since it does
not contravene Section 10, Article X of the Constitution or Sections 6 and 10
of the Local Government Code. It is likewise settled that a statute or
ordinance cannot be impugned collaterally. 210
20. Since the RTC has deferred its ruling on the propriety of the
Amended Order dated January 16, 2006 to this Court, the Province of
Palawan asks that said Order be sustained because:
20.1. Under Section 6, Rule 135 of the Rules of Court, when

by law jurisdiction is conferred on a court, all auxiliary writs and
processes necessary to carry it into effect may be employed by such
court. The Amended Order merely sought to protect the subject of the
207
Id. at 962, 967-968.
208
Id. at 968-969.
209
Id. at 1402-1403.
210
Id. at 969-971.
~
litigation and to ensure that the RTC's decision may be carried into
effect when it attains finality. 211
20.2. The Amended Order encompasses issues that were raised

and passed upon by the RTC, particularly, the issue of whether the
Province of Palawan is entitled to receive 40% of the government's
share in the proceeds of the Camago-Malampaya project. 212
20.3. In a catena of decisions, the Court has allowed

affirmative and even injunctive reliefs in cases for declaratory relief 213
21. The Provincial Governor's signing of the PIA was valid. 214
21.1. Under Article 85(b)( 1)(vi), Rule XV of the Implementing

Rules and Regulations of the Local Government Code, the Provincial
Governor is authorized to represent the province in all its business
transactions and to sign all contracts on its behalf upon the authority
of the Sangguniang Panlalawigan or pursuant to law or ordinance.
The Provincial Governor of Palawan signed the PIA with the authority
of the Sangguniang Panlalawigan, representing all of its component
municipalities and its capital city of Puerto Princesa. Palawan's two
congressmen also signed the PIA to warrant that they were the duly
elected representatives of the province and to comply with the
requirement under the General Appropriations Act that
implementation of the projects must be in coordination with them. 215
21.2. The Province of Palawan is the only LGU which has

territorial jurisdiction over the Camago-Malampaya area under R.A.
No. 7611. 216
21.3. It may have been the Provincial Governor that signed the
PIA, but the proposed projects thereunder would be implemented
province-wide, to include all component municipalities and barangays
as well as Puerto Princesa. This is more advantageous to the 23
municipalities of Palawan compared to Arigo, et al. 's stand that "the
sharing should be one municipality (45o/o) and one barangay (35%) or
a total of 80%, with the balance of 20% for the rest of Palawan's 22
municipalities including Puerto Princesa City." 217
211
Id. at 977-978.
212
Id. at 978-979.
213
Id. at 981-985.
214
Id. at 1410.
215
Id. at 1410-1411.
216
Id. at 1411.
211 Id.
~
22. E.O. No. 683, which uses "net proceeds" of Camago-

Malampaya project as the basis of sharing, does not violate Section 290 of
the Local Government Code where the share of the LGU is based on gross
collection. 218
22.1. The allocation of funds under E.O. No. 683 is not, strictly
speaking, the sharing of proceeds of national wealth development
under Section 290 of the Local Government Code considering that
Palawan's claimed 40% share is still under litigation. 219
22.2. In any case, "gross collection" under Section 290 of the

Local Government Code cannot refer to gross proceeds because under
Service Contract No. 38 and A.O. No. 381, the production sharing
scheme involves deduction of exploration, development and
production costs from the gross proceeds of the gas sales. Since the
net proceeds referred to in E.O. No. 683 is the same amount as the
government's gross collection from the Camago-Malampaya project,
the Local Government Code was not violated. 220
23. The Pimentel ruling cannot be applied to the release of funds

under E.O. No. 683. It does not refer to the LGU's claimed 40% share; it is
in the form of financial assistance pursuant to Section 25( c) of the Local
Government Code which authorizes the President to direct the appropriate
national agency to provide financial and other forms of assistance to the
LGU. The funds were appropriated in the General Appropriations Act of
2007 and 2008 for the DoE and not under the items for allocations from
national wealth to LGUs. 221
24. CA-G.R. SP No. 102247 was correctly dismissed by the CA.

Failure to submit essential and necessary documents is a sufficient ground to
dismiss a petition under Rule 46 of the Rules of Court. Arigo, et al.
prematurely filed its petition before the CA as it was anchored on the same
basic issues to be resolved in G.R. No. 170867. Furthermore, Arigo, et al.
had no legal standing either as real parties-in~interest, as they failed to
establish that they would be benefitted or injured by the judgment in the suit,
or as taxpayers, as they failed to show that the E.O. No. 638 and PIA
involved an illegal disbursement of public funds. 222
218
Id. at 1412.
219 Id.
220
Id. at 1412-1413.
221
Id. at 1413-1414.
222
Id. at 1409-1410.
*
Ruling of the Court
LGUs' share in national wealth
Under Section 25, Article II of the 1987 Constitution, "(t)he State

shall ensure the autonomy of local governments." In furtherance of this
State policy, the 1987 Constitution conferred on LGUs the power to create
its own sources of revenue and the right to share not only in the national
taxes, but also in the proceeds of the utilization of national wealth in their
respective areas. Thus, Sections 5, 6, and 7 of Article X of the 1987
Constitution provides:
Section 5. Each local government unit shall have the power to

create its own sources of revenues and to levy taxes, fees, and charges
subject to such guidelines and limitations as the Congress may provide,
consistent with the basic policy of local autonomy.· Such taxes, fees, and
charges shall accrue exclusively to the local governments.
Section 6. Local government units shall have a just share, as

determined by law, in the national taxes which shall be automatically
released to them.
Section 7. Local governments shall be entitled to an equitable
share in the proceeds of the utilization and development of the
national wealth within their respective areas, in the manner provided
by law, including sharing the same with the inhabitants by way of direct
benefits. (Emphasis ours)
At the center of this controversy is Section 7, an innovation in the

1987 Constitution aimed at giving fiscal autonomy to local governments.
Deliberations of the 1986 Constitutional Commission reveal the rationale for
this provision, thus:
MR. OPLE. x xx
Just to cite specific examples, in the case of timberland within the

area of jurisdiction of the Province of Quirino or the Province of Aurora,
we feel that the local governments ought to share in whatever revenues are
generated from this particular natural resource which is also considered a
national resource in a proportion to be determined by Congress. This may
mean sharing not with the local government but with the local population.
The geothermal plant in the Machan, Makiling-Banahaw area in Laguna,
the Tiwi Geothermal Plant in Albay, there is a sense in which the people in
these areas, hosting the physical facility based on the resources found
under the ground in their area which are considered national wealth,
should participate in terms of reasonable rebates on the cost of power that
they pay. This is true of the Maria Cristina area in Central Mindanao, for
example. May I point out that in the previous government, this has always
been a very nettlesome subject of the Cabinet debates. Are the people in
the locality, where God chose to locate His bounty, not entitled to some
reasonable modest sharing of this with the national government? Why
+
should the national government claim all the revenues arising from
them? And the usual reply of the technocrats at that time is that there must
be uniform treatment of all citizens regardless of where God's gifts are
located, whether below the ground or above the ground. This, of course,
has led to popular disenchantment. In Albay, for example, the government
then promised a 20-percent rebate in power because of the contributions of
the Tiwi Plant to the Luzon grid. Although this was ordered, I remember
that the Ministry of Finance, together with the National Power
Corporation, refused to implement it. There. is a bigger economic
principle behind this, the principle of equity. If God chose to locate
the great rivers and sources of hydroelectric power in lligan, in
Central Mindanao, for example, or in the Cordillera, why should the
national government impose fuel adjustment taxes in order to cancel
out the comparative advantage given to the people in these localities
through these resources? So, it is in that sense that under Section 8, the
local populations, if not the local governments, should have a share of
whatever national proceeds may be realized from this natural wealth of the
nation located within their jurisdictions.
xx xx
MR. NATIVIDAD. The history of local governments shows that the usual
weaknesses of local governments are: 1) fiscal inability to support itself;
2) lack of sufficient authority to carry out its duties; and 3) lack of
authority to appoint key officials.
Under this Article, are these traditional weaknesses of local

governments addressed to [sic]?
MR. NOLLEDO. Yes. The first question is on fiscal inability to support

itself. It will be noticed that we widened the taxing powers if local
governments. I explained that exhaustively yesterday unless the
Gentleman wants me to explain again.
MR. NATIVIDAD. No, that is all right with me.
MR. NOLLEDO. There is a right of retention of local taxes by local

governments and according to the Natividad, Ople, Maambong, de los
Reyes amendment, local government units shall share in the proceeds
of the exploitation of the national wealth within the area or region, etc.
xxx
xx xx
MR. OPLE. x xx
In the hinterland regions of the Philippines, most

municipalities receive an annual income of only about P200,000 so
that after paying the salaries of local officials and employees, nothing
is left to fund any local development project. This is a prescription for
a self-perpetuating stagnation and backwardness, and numbing
community frustrations, as well as a chronic disillusionment with the
central government. The thrust towards local autonomy in this entire
"f
Article on Local Governments may suffer the fate of earlier heroic efforts
of decentralization which, without innovative features for local income
generation, remained a pious hope and a source of discontent. To prevent
this, this amendment which Commissioner Davide. and I jointly propose
will open up a whole new source of local financial self-reliance by
establishing a constitutional principle of local governments, and their
populations, sharing in the proceeds of national wealth in their areas of
jurisdiction. The sharing with the national government can be in the form
of shares from revenues, fees and charges levied on the exploitation or
development and utilization of natural resources such as mines, hydro-
electric and geothermal facilities, timber, including rattan, fisheries, and
processing industries based on indigenous raw materials.
But the sharing, Madam President, can also take the form of direct
benefits to the population in terms of price advantages to the people
where, say, cheaper electric power is sourced from a local hydroelectric or
geothermal facility. For example, in the provinces reached by the power
from the Maria Cristina hydro-electric facility in Mindanao, the direct
benefits to the population cited in this section can take the form of lower
prices of electricity. The same benefit can be extended to the people of
Albay, for example, where volcanic steam in Tiwi provides 55 megawatts
of cheap power to the Luzon grid.
The existing policy of slapping uniform fuel adjustment taxes to

equalize rates throughout the country in the name of price standardization
will have to yield to a more rational pricing policy that recognizes the
entitlement of local communities to the enjoyment of their own
comparative advantage based on resources that God has given them.
And so, Madam President, I ask that the Committee consider this proposed
amendment. 223 (Emphasis ours)
The Local Government Code gave flesh to Section 7, providing that:
Section 18. Power to Generate and Apply Resources. - Local

government units shall have the power and authority to establish an
organization that shall be responsible for the efficient and effective
implementation of their development plans, program objectives and
priorities; to create their own sources of revenues and to levy taxes, fees,
and charges which shall accrue exclusively for their use and disposition
and which shall be retained by them; to have a just share in national taxes
which shall be automatically and directly released to them without need of
any further action; to have an equitable share in the proceeds from the
utilization and development of the national wealth and resources
within their respective territorial jurisdictions including sharing the
same with the inhabitants by way of direct benefits; to acquire,
develop, lease, encumber, alienate, or otherwise dispose of real or personal
property held by them in their proprietary capacity and to apply their
resources and assets for productive, developmental, or welfare purposes,
in the exercise or furtherance of their governmental or proprietary powers
and functions and thereby ensure their development into self-reliant
communities and active participants in the attainment of national goals.
~
223
Record of the 1986 Constitution Commission, Volume III, pp. 178, 216 and 482.
Section 289. Share in the Proceeds from the Development and

Utilization of the National Wealth. - Local government units shall have an
equitable share in the proceeds derived from the utilization and
development of the national wealth within their respective areas,
including sharing the same with the inhabitants by way of direct
benefits.
Section 290. Amount of Share of Local Government Units. - Local

government units shall, in addition to the internal revenue allotment, have
a share of forty percent (40%) of the gross collection derived by the
national government from the preceding fiscal year from mining taxes,
royalties, forestry and fishery charges, and such other taxes, fees, or
charges, including related surcharges, interests, or fines, and from its
share in any co-production, joint venture or production sharing
agreement in the utilization and development of the national wealth
within their territorial jurisdiction.
Section 291. Share of the Local Governments from any

Government Agency or Owned or Controlled Corporation. - Local
government units shall have a share based on the preceding fiscal year
from the proceeds derived by any government agency or government-
owned or controlled corporation engaged in the utilization and
development of the national wealth based on the following formula
whichever will produce a higher share for the local government unit:
(a) One percent (1 %) of the gross sales or receipts of the preceding

calendar year; or
(b) Forty percent (40%) of the mining taxes, royalties, forestry and
fishery charges and such other taxes, fees or charges, including related
surcharges, interests, or fines the government agency or government
owned or controlled corporation would have paid if it were not otherwise
exempt. (Emphasis ours)
Underlying these and other fiscal prerogatives granted to the LGUs

under the Local Government Code is an enhanced policy of local autonomy
that entails not only a sharing of powers, but also of resources, between the
National Government and the LGUs. Thus, during the Senate deliberations
on the proposed local government code, it was emphasized:
Senator Gonzales. The old concept of local autonomy, Mr.

President, is, we grant more powers, more functions, more duties, more
prerogatives, more responsibilities to local government units. But actually
that is not autonomy. Because autonomy, without giving them the
resources or the means in order that they can effectively carry out their
enlarged duties and responsibilities, will be a sham autonomy. I
understand that the Gentleman's concept of autonomy is really centered in
not merely granting them more powers and more responsibilities, but also
more means; meaning, funding, more powers to raise funds in order that
they can put into effect whatever policies, decisions and programs that the
local government may approve. Is my understanding correct, Mr.
~
President?
Senator Pimentel. The distinguished Gentleman is correct, Mr.

President, Book II of the draft bill under consideration deals with fiscal
matters. 224
This push for both administrative and fiscal autonomy was reaffirmed
during the deliberations of the Bicameral Conference Committee on the
proposed Local Government Code and the eventual signing of the Bicameral
Conference Committee Report. On these occasions, Senator Aquilino Q.
Pimentel, Jr., as Committee Chairman for the Senate panel, declared:
CHAIRMAN PIMENTEL: Mr. Chairman, in response to your

opening statement, let me say in behalf of the Senate panel that we believe
the local government code is long overdue. It is time that we really
empower our people in the countryside. And to do this, the local
government code version of the Senate is based upon two premises. No.
1, we have to share power between the national government and local
government. And No. 2, we have to share resources between the national
government and local government. It is the only way by which we believe
countryside development will become a reality in our nation. We can all
speak out and spew rhetoric about countryside development, but unl~ss
and until local governments are empowered and given financial
wherewithal to transform the countryside by the delivery of basic services,
then we can never attain such a dream of ensuring that we share the
development of this nation to the countryside where most of our people
reside. x x x225
xx xx
CHAIRMAN PIMENTEL. xx x
Yes, we'd like to announce that finally, after three years of

deliberation and hundreds of meeting not only by the Technical
Committee, but by the Bicameral Conference Committee itself, we have
finally come up with the final version of the Local· Government Code for
1991.
xx x And if there's any one thing that the Local Government Code
will do for our country, it is to provide the mechanism for the development
of the countryside without additional cost to the government because here,
what we are actually doing is merely to reallocate the funds of the national
government giving a substantial portion of those funds to the Local
Government Units so that they, in turn, can begin the process of
development in their own respective territories.
And to my mind, this would be a signal achievement of the Senate

and the House of Representatives. And that finally, we are placing in the
hands of the local government officials their wherewithals [sic] and the
tools necessary for the development of the people in the countryside and
of our Local Government Units in particular.
224
Record of the Senate, May 8, 1990, p. 16.
225
Record of the Bicameral Conference Committee on Local Government, February 12, 1991, pp.
8-9.
4-
xx x x226
None of the parties in the instant cases dispute the LGU's entitlement
to an equitable share in the proceeds of the utilization and development of
national wealth within their respective areas. The question principally raised
here is whether the national wealth, in this case the Camago-Malampaya
reservoir, is within the Province of Palawan's "area" for it to be entitled to
40o/o of the government's share under Service Contract No. 38. The issue,
therefore, hinges on what comprises the province's "area" which the Local
Government Code has equated as its "territorial jurisdiction." While the
Republic asserts that the term pertains to the LGU's territorial boundaries,
the Province of Palawan construes it as wherever the LGU exercises
jurisdiction.
Territorial jurisdiction refers to

territorial boundaries as defined in
the LGU's charter
The Local Government Code does not define the term "territorial
jurisdiction." Provisions therein, however, indicate that territorial
jurisdiction refers to the LGU's territorial boundaries.
Under the Local Government Code, a "province" is composed of a

cluster of municipalities, or municipalities and component cities. 227 A
"municipality," in tum, is described as a group of barangays, 228 while a
"city" is referred to as consisting of more urbanized and developed
barangays. 229
In the creation of municipalities, cities and barangays, the Local

Government Code uniformly requires that the territorial jurisdiction of these
government units be "properly identified by metes and bounds," thus:
Section 386. Requisites for Creation. -
xx xx
(b) The territorial jurisdiction of the new barangay shall be

properly identified by metes and bounds or by more or less permanent
natural boundaries. The territory need not be contiguous if it comprises
two (2) or more islands.
xx xx
226
Record of the Bicameral Conference Committee on Local Government, September 4, 1991, pp.
12-13.
221
Section 459.
228
Section 440.
229
Section 448.
~
xx xx
(b) The territorial jurisdiction of a newly-created municipality

shall be properly identified by metes and bounds. The requirement on
land area shall not apply where the municipality proposed to be created is
composed of one (1) or more islands. The territory need not be contiguous
if it comprises two (2) or more islands.
xx xx
Section 450. Requisites for Creation.
xx xx
(b) The territorial jurisdiction of a newly-created city shall be

properly identified by metes and bounds. The requirement on land area
shall not apply where the city proposed to be created is composed of one
(1) or more islands. The territory need not be contiguous if it comprises
xx xx (Emphasis ours)
The intention, therefore, is to consider an LGU's territorial

jurisdiction as pertaining to a physical location or area as identified by its
boundaries. This is also clear from other provisions of the Local
Government Code, particularly Sections 292 and 294, on the allocation of
LGUs' shares from the utilization of national wealth, which speak of the
location of the natural resources:
Section 292. Allocation of Shares. - The share in the preceding

Section shall be distributed in the following manner:
(a) Where the natural resources are located in the province:
(1) Province -Twenty percent (20%);

(2) Component City/Municipality - Forty-five percent (45%); and
(3) Barangay - Thirty-five percent (35%)
Provided, however, That where the natural resources are located in

two (2) or more provinces, or in two (2) or more component cities or
municipalities or in two (2) or more barangays, their respective shares
shall be computed on the basis of:
(1) Population - Seventy percent (70%); and

(2) Land area - Thirty percent (30%)
(b) Where the natural resources are located in a highly urbanized

or independent component city:
~
(1) City - Sixty-five percent (65%); and

Provided, however, That where the natural resources are located in

such two (2) or more cities, the allocation of shares shall be based on the
formula on population and land area as specified in paragraph (a) of this
Section.
Section 294. Development and Livelihood Projects. - The proceeds

from the share of local government units pursuant to this chapter shall be
appropriated by their respective sanggunian to finance local government
and livelihood projects: Provided, however, That at least eighty percent
(80%) of the proceeds derived from the development and utilization of
hydrothermal, geothermal, and other sources of energy shall be applied
solely to lower the cost of electricity in the local government unit where
such a source of energy is located. (Emphasis ours)
That "territorial jurisdiction" refers to the LGU's territorial boundaries

is a construction reflective of the discussion of the framers of the 1987
Constitution who referred to the local government as the "locality" that is
"hosting" the national resources and a "place where God chose to locate His
bounty. " 230 It is also consistent with the language ultimately used by the
Constitutional Commission when they referred to the national wealth as
those found within (the LGU's) respective areas. By definition, "area" refers
to a particular extent of space or surface or a geographic region. 231
Such construction is in conformity with the pronouncement in Sen.

Alvarez v. Hon. Guingona, Jr. 232 where the Court, in explaining the need for
adequate resources for LGUs to undertake the responsibiliti~s ensuing from
decentralization, made the following disquisition in which "territorial
jurisdiction" was equated with territorial boundaries:
The practical side to development through a decentralized local

government system certainly concerns the matter of financial resources.
With its broadened powers and increased responsibilities, a local
government unit must now operate on a much wider scale. More extensive
operations, in tum, entail more expenses. Understandably, the vesting of
duty, responsibility and accountability in every local government unit is
accompanied with a provision for reasonably adequate resources to
discharge its powers and effectively carry out its functions. Availment of
such resources is effectuated through the vesting in every local
government unit of (1) the right to create and broaden its own source of
revenue; (2) the right to be allocated a just share in national taxes, such
share being in the form of internal revenue allotments (IRAs); and (3) the
right to be given its equitable share in the proceeds of the utilization
and development of the national wealth, if any, within its territorial
210
Record of the 1986 Constitution Commission, Volume III, pp. 178 and 194.
231
<http://www.merriam-webster.com/dictionary/area> (last updated November 28, 2018).
212
322 Phil. 774 (1996).
boundaries. 233 (Emphasis ours)
An LGU has been defined as a political subdivision of the State which

is constituted by law and possessed of substantial control over its own
affairs. 234 LGU s, therefore, are creations of law. In this regard, Sections 6
and 7 of the Local Government Code provide:
Section 6. Authority to Create Local Government Units. - A local

government unit may be created, divided, merged, abolished, or its
boundaries substantially altered either by law enacted by Congress in the
case of a province, city, municipality, or any other political subdivision, or
by ordinance passed by the sangguniang panlalawigan or sangguniang
panlungsod concerned in the case of a barangay located within its
territorial jurisdiction, subject to such limitations and requirements
prescribed in this Code.
Section 7. Creation and Conversion. - As a general rule, the

creation of a local government unit or its conversion from one level to
another level shall be based on verifiable indicators of viability and
projected capacity to provide services, to wit:
(a) Income. - It must be sufficient, based on acceptable standards,

to provide for all essential government facilities and services and special
functions commensurate with the size of its population, as expected of the
local government unit concerned;
(b) Population. - It shall be determined as the total number of

inhabitants within the territorial jurisdiction of the local government unit
concerned; and
(c) Land Area. - It must be contiguous, unless it comprises two or

more islands or is separated by a local government unit independent of the
others; properly identified by metes and bounds with technical
descriptions; and sufficient to provide for such basic services and
facilities to meet the requirements of its populace.
Compliance with the foregoing indicators shall be attested to by

the Department of Finance (DOF), the National Statistics Office (NSO),
and the Lands Management Bureau (LMB) of the Department of
Environment and Natural Resources (DENR). (Emphasis ours)
In enacting charters of LGUs, Congress .is called upon to properly

identify their territorial jurisdiction by metes and bounds. Mariano, Jr. v.
COMELEC2 35 stressed the need to demarcate the territorial boundaries of
LGUs with certitude because they define the limits of the local governments'
territorial jurisdiction. Reiterating this dictum, the Court, in Municipality of
Pateros v. Court ofAppeals, et al. ,236 held:
233
Id. at 783.
234 Id.
235
321 Phil. 259, 265-266 (1995).
236
607 Phil. 104 (2009).
~
[W]e reiterate what we already said about the importance and sanctity of
the territorial jurisdiction of an LGU:
The importance of drawing with precise strokes the territorial

boundaries of a local unit of government cannot be overemphasized.
The boundaries must be clear for they define the limits of the
territorial jurisdiction of a local government unit. It can legitimately
exercise powers of government only within the limits of its territorial
jurisdiction. Beyond these limits, its acts are ultra vires. Needless to
state, any uncertainty in the boundaries of local government units will sow
costly conflicts in the exercise of governmental powers which ultimately
will prejudice the people's welfare. This is the evil sought to be avoided
by the Local Government Unit in requiring that the land area of a local
government unit must be spelled out in metes and bounds, with
technical descriptions. 237 (Emphasis ours)
Clearly, therefore, a local government's territorial jurisdiction cannot

extend beyond the boundaries set by its organic law.
Area as delimited by law and not

exercise of jurisdiction as basis of
the LGU's equitable share
The Court cannot subscribe to the argument posited by the Province of

Palawan that the national wealth, the proceeds from which the State is
mandated to share with the LGUs, shall be wherever the local government
exercises any degree of jurisdiction.
An LGU's territorial jurisdiction is not necessarily co-extensive with

its exercise or assertion of powers. To hold otherwise may result in
condoning acts that are clearly ultra vires. It may lead to, in the words of the
Republic, LGU s "rush[ing] to exercise its powers and functions in areas rich
in natural resources (even if outside its boundaries) with the intention of
seeking a share in the proceeds of its exploration" 238 - a situation that
"would sow conflict not only among the local government units and the
national government but worse, between and among local government
units. " 239
There is likewise merit in the Republic's assertion that Palawan's

interpretation of what constitutes an LGU's territorial jurisdiction may
produce absurd consequences. Indeed, there are natural resources, such as
forests and mountains, which can be found within the LGU's territorial
boundaries, but are, strictly speaking, under national jurisdiction,
237
Id. at 121.
238
Rollo (G. R. No. 170867), p. 1574.
239
Id. at 1575.
~
specifically that of the Department of Environment and Natural

Resources. 240 To equate territorial jurisdiction to areas where the LGU
exercises jurisdiction means that these natural resources will have to be
excluded from the sharing scheme although they are geographically within
the LGU's territorial limits. 241 The consequential incongruity of this scenario
finds no support either in the language or in the context of the equitable
sharing provisions of the 1987 Constitution and the Local Government
Code.
The Court finds it appropriate to also cite Section 150 of the Local
Government Code which speaks of the situs or local business taxes under
Section 143 of the same law. Section 150 provides:
Section 150. Situs of the Tax. -
xx xx
(b) The following sales allocation shall apply to manufacturers,

assemblers, contractors, producers, and exporters with factories, project
offices, plants, and plantations in the pursuit of their business:
(1) Thirty percent (30%) of all sales recorded in the

principal office shall be taxable by the city or municipality where
the principal office is located; and
(2) Seventy percent (70%) of all sales recorded in the

principal office shall be taxable by the city or municipality
where the factory, project office, plant, or plantation is
located.
(c) In case of a plantation located at a place other than the

place where the factory is located, said seventy percent (70%)
240
Under Section 17 of the Local Government Code, municipalities and provinces are authorized
to exercise such powers as are "necessary, appropriate or incidental to efficient provisions of the basic
services and facilities enumerated (therein)," including:
xx xx
(2) For a Municipality:
xx xx
(ii) Pursuant to national policies and subject to supervision, control
and review of the DENR, implementation of community-based forestry projects which
include integrated social forestry programs and similar projects; management and control
of communal forests with an area not exceeding fifty (50) square kilometers;
establishment of tree parks, greenbelts, and similar forest development projects;
xx xx
(3) For a Province:
xx xx
(iii) Pursuant to national policies and subject to supervision, control and
review of the DENR, enforcement of forestry laws limited to community-based forestry
projects, pollution control law, small-scale mining law, and other laws on the protection
of the environment; and mini-hydroelectric projects for local purposes;
xx xx (Emphasis ours)
241
Rollo (G.R. No. 170867), p. 1485.
~
mentioned in subparagraph (b) of subsection (2) above shall be

divided as follows:
(1) Sixty percent (60%) to the city or municipality

where the factory is located; and
(2) Forty percent (40%) to the city or municipality

where the plantation is located.
(d) In cases where a manufacturer, assembler, producer, exporter or

contractor has two (2) or more factories, project offices, plants, or
plantations located in different localities, the seventy percent (70%) sales
allocation mentioned in subparagraph (b) of subsection (2) above shall be
prorated among the localities where the factories, project offices,
plants, and plantations are located in proportion to their respective
volumes of production during the period for which the tax is due.
(e) The foregoing sales allocation shall be applied irrespective

of whether or not sales are made in the locality where the factory,
project office, plant, or plantation is located. (Emphasis ours)
The foregoing provision illustrates the untenability of the Province of

Palawan's interpretation of "territorial jurisdiction" based on exercise of
jurisdiction. To sustain the province's construction would mean that the
territorial jurisdiction of the municipality or city where the factory, plant,
project office or plantation is situated, extends to the LGU where the
principal office is located because said municipality or city can exercise the
authority to tax the sale transactions made or recorded in the principal office.
This could not have been the intent of the framers of the Local Government
Code.
The Provincial Government of Palawan argues that its territorial

jurisdiction extends to the Camago-Malampaya reservoir considering that its
local police maintains peace and order in the area; crimes committed within
the waters surrounding the province have been prosecuted and tried in the
courts of Palawan; and the provincial government enforces environmental
laws over the same area. 242 The province also cites Section 468 of the Local
Government Code, which authorizes the Sanggunian Panlalawigan to enact
ordinances that protect the environment, as well as Sections 26 and 27 of the
law, which require consultation with the LGUs concerned and the approval
of their respective sanggunian before the National Government may
commence any project that will have an environmental impact. 243 The
province avers that the Contractor, in fact, obtained the necessary
endorsement from the Sangguniang Panlalawigan of Palawan before
starting its operations. 244
242
Id. at 4 78.
243
Id. at474.
244
Id. at 478.
~
The Court notes, however, that the province's claims of maintaining

peace and order in the Camago-Malampaya area and of enforcing
environmental laws therein have not been substantiated by credible proof.
The province likewise failed to adduce evidence of the crimes supposedly
committed in the same area or their prosecution in Palawan's courts.
The province cites illegal fishing, poaching and illegal entry as the
cases tried before the courts of Palawan. As conceded by the parties,
however, the subject gas reservoir is situated, not in the marine waters, but in
the continental shelf. The Province of Palawan has not established that it
has, in fact, exercised jurisdiction over this submerged land area.
The LGU's authority to adopt and implement measures to protect the

environment does not determine the extent of its territorial jurisdiction. The
deliberations of the Bicameral Conference Committee on the proposed Local
Government Code provides the proper context for the exercise of such
authority:
HON. DE PEDRO. The Senate version does not have any specific
provision on this. The House's reads:
"The delegation to each local government unit of

the responsibility in the management and maintenance of
environmental balance within its territorial jurisdiction."
CHAIRMAN PIMENTEL. Well, this is a matter of delegating to

the local government units power to determine environmental concerns,
which is good. However, we have some reservations precisely because
environment does not know of territorial boundaries. That is our
reservation there. And we have to speak of the totality of the
environment of the nation rather than the provincial or municipal in
that respect. x x x245 (Emphasis ours)
Thus, the LGU's statutory obligation to maintain ecological balance is

but part of the nation's collective effort to preserve its environment as a
whole. The extent to which local legislation or enforcement protects the
environment will not define the LGU's territory.
Sections 26 and 27 of the Local Government Code provide:
Section 26. Duty of National Government Agencies in the

Maintenance of Ecological Balance. - It shall be the duty of every national
agency or government-owned or controlled corporation authorizing or
involved in the planning and implementation of any project or program
that may cause pollution, climatic change, depletion of non-renewable
resources, loss of crop land, rangeland, or forest cover, and extinction of
245
Records of the Bicameral Conference Committee on Local Government, February 12, 1991, p.
39.
-'f
animal or plant species, to consult with the local government units,

nongovernmental organizations, and other sectors concerned and explain
the goals and objectives of the project or program, its impact upon the
people and the community in terms of environmental or ecological
balance, and the measures that will be undertaken to prevent or minimize
the adverse effects thereof.
Section 27. Prior Consultations Required. - No project or program

shall be implemented by government authorities unless the consultations
mentioned in Sections 2 (c) and 26 hereof are complied with, and prior
approval of the sanggunian concerned is obtained: Provided, That
occupants in areas where such projects are to be implemented shall not be
evicted unless appropriate relocation sites have been provided, in
accordance with the provisions of the Constitution.(Emphasis ours)
It is clear from Sections 26 and 27 that the consideration for the

required consultation and sanggunian approval is the environmental impact
of the National Government's project on the local community. A project,
however, may have an ecological impact on a locality without necessarily
being situated therein. Thus, prior consultation made pursuant to the
foregoing provisions does not perforce establish that the national wealth
sought to be utilized is within the territory of the LGl T consulted.
I
In fine, an LGU cannot claim territorial jurisdiction over an area

simply because its government has exercised a certain degree of authority
over it. Territorial jurisdiction is defined, not by the local government, but
by the law that creates it; it is delimited, not by the extent of the LGU's
exercise of authority, but by physical boundaries as fixed in its charter.
Unless clearly expanded by

Congress, the LGU's territorial
jurisdiction refers only to its land
area.
Utilization of natural resources

found within the land area as
delimited by law is subject to the
40°/o LGU share.
Since it refers to a demarcated area, the term "territorial jurisdiction"

is evidently synonymous with the term "territory." In fact, "territorial
jurisdiction" is defined as the limits or territory within which authority may
be exercised. 246
246
<https://www.me1Tiam-webster.com/dictionary/jurisdiction#legalDictionary> (last updated
November 27, 2018).
~
Under the Local Government Code, particularly the provisions on the

creation of municipalities, cities and provinces, and LGUs in general,
territorial jurisdiction is contextually synonymous with territory and the term
"territory" is used to refer to the land area comprising the LGU, thus:
(a) A municipality may be created if it has an average annual

income, as certified by the provincial treasurer, of at least Two million five
hundred thousand pesos (P2,500,000.00) for the last two (2) consecutive
years based on the 1991 constant prices; a population of at least twenty-
five thousand (25,000) inhabitants as certified by the National Statistics
Office; and a contiguous territory of at least fifty (50) square
kilometers as certified by the Lands Management Bureau: Provided,
That the creation thereof shall not reduce the land area, population or
income of the original municipality or municipalities at the time of said
creation to less than the minimum requirements prescribed herein.
(b) The territorial jurisdiction of a newly-created municipality

shall be properly identified by metes and bounds. The requirement on
land area shall not apply where the municipality proposed to be created is
composed of one (1) or more islands. The territory need not be
contiguous if it comprises two (2) or more islands.
(c) The average annual income shall include the income accruing
to the general fund of the municipality concerned, exclusive of special
funds, transfers and non-recurring income.
(d) Municipalities existing as of the date of the effectivity of this

Code shall continue to exist and operate as such. Existing municipal
districts organized pursuant to presidential issuances or executive orders
and which have their respective set of elective municipal officials holding
office at the time of the effectivity of this Code shall henceforth be
considered as regular municipalities.
(a) A municipality or a cluster of barangays may be converted into

a component city if it has an average annual income, as certified by the
Department of Finance, of at least Twenty million (P20,000,000.00) for
the last two (2) consecutive years based on 1991 constant prices, and if it
has either of the following requisites:
(i) a contiguous territory of at least one hundred (100)

square kilometers, as certified by the .Lands Management
Bureau; or
(ii) a population of not less than one hundred fifty thousand

(150,000) inhabitants, as certified by the National Statistics Office:
'4
Provided, That, the creation thereof shall not reduce the land area,
population, and income of the original unit or units at the time of said
(b) The territorial jurisdiction of a newly-created city shall be

properly identified by metes and bounds. The requirement on land area
shall not apply where the city proposed to be created is composed of one
(1) or more islands. The territory need not be contiguous if it comprises
to the general fund, exclusive of specific funds, transfers, and non-
recurring income.
(a) A province may be created if it has an average annual income,

as certified by the Department of Finance, of not less than Twenty million
pesos (P20,000,000.00) based on 1991 constant prices and either of the
following requisites:
(i) a contiguous territory of at least two thousand

(2,000) square kilometers, as certified by the Lands
Management Bureau; or
(ii) a population of not less than two hundred fifty thousand

(250,000) inhabitants as certified by the National Statistics Office:
Provided, That, the creation thereof shall not reduce the land area,
population, and income of the original unit or units at the time of said
(b) The territory need not be contiguous if it comprise two (2) or

more islands or is separated by a chartered city or cities which do not
contribute to the income of the province.
to the general fund, exclusive of special funds, trust funds, transfers and
non-recurring income.
Section 7. Creation and Conversion. - As a general rule, the

creation of a local government unit or its conversion from one level to
another level shall be based on verifiable indicators of viability and
projected capacity to provide services, to wit:
(a) Income. - It must be sufficient, based on acceptable standards,

to provide for all essential government facilities and services and special
functions commensurate with the size of its population, as expected of the
local government unit concerned;
(b) Population. - It shall be determined as the total number of

inhabitants within the territorial jurisdiction of the local government unit
concerned; and
,4
(c) Land Area. - It must be contiguous, unless it comprises two or

more islands or is separated by a local government unit independent of the
others; properly identified by metes and bounds with technical
descriptions; and sufficient to provide for such basic services and
facilities to meet the requirements of its populace.
Compliance with the foregoing indicators shall be attested to by

the Department of Finance (DOF), the National Statistics Office (NSO),
and the Lands Management Bureau (LMB) of the Department of
Environment and Natural Resources (DENR). (Emphasis ours)
That the LGUs' respective territories under the Local Government

Code pertain to the land area is clear from the fact that: (a) the law generally
requires the territory to be "contiguous"; (b) the minimum area of the
contiguous territory is measured in square kilometers; (c) such minimum
area must be certified by the Lands Management Bureau; and (d) the
territory should be identified by metes and bounds, with technical
descriptions.
The word "contiguous" signifies two solid masses being in actual

contact. Square kilometers are units typically used to measure large areas of
land. The Land Management Bureau, a government agency that absorbed
the functions of the Bureau of Lands, recommends policies and programs for
the efficient and effective administration, management and disposition of
alienable and disposable lands of the public domain and other lands outside
the responsibilities of other government agencies. 247 Finally, "metes and
bounds" are the boundaries or limits of a tract of land especially as described
by reference and distances between points on the land, 248 while "technical
descriptions" are used to describe these boundaries and are commonly found
in certificates of land title.
The following pronouncement in Tan v. Comelec249 is particularly

instructive:
It is of course claimed by the respondents in their Comment to the

exhibits submitted by the petitioners (Exhs. C and D, Rollo, pp. 19 and
91), that the new province has a territory of 4,019.95 square kilometers,
more or less. This assertion is made to negate the proofs submitted,
disclosing that the land area of the new province cannot be more than
3,500 square kilometers because its land area would, at most, be only
about 2,856 square kilometers, taking into account government statistics
relative to the total area of the· cities and municipalities constituting
Negros del Norte. Respondents insist that when Section 197 of the
Local Government Code speaks of the territory of the province to be
created and requires that such territory be at least 3,500 square
kilometers, what is contemplated is not only the land area but also the
247
Section 14, Executive Order No. 192 (1987).
248
<https://www.merriam-webster.com/legal/metes%20and%20bounds>.
249
Supra note 34.
'f
land and water over which the said province has jurisdiction and
control. It is even the submission of the respondents that in this regard
the marginal sea within the three mile limit should be considered in
determining the extent of the territory of the new province. Such an
interpretation is strained, incorrect, and fallacious.
The last sentence of the first paragraph of Section 197 is most

revealing. As so stated therein the "territory need not be contiguous if it
comprises two or more islands. " The use of the word territory in this
particular provision of the Local Government Code and in the very last
sentence thereof, clearly reflects that "territory" as therein used, has
reference only to the mass of land area and excludes the waters over
which the political unit exercises control.
Said sentence states that the "territory need not be contiguous."

Contiguous means (a) in physical contact; (b) touching along all or
most of one side; (c) near, text, or adjacent. "Contiguous", when
employed as an adjective, as in the above sentence, is only used when
it describes physical contact, or a touching of sides of two solid masses
of matter. The meaning of particular terms in a statute may be ascertained
by reference to words associated with or related to them in the statute.
Therefore, in the context of the sentence above, what need not be
"contiguous" is the "territory" the physical mass of land area. There
would arise no need for the legislators to use the word cop.tiguous if
they had intended that the term "territory" embrace not only land
area but also territorial waters. It can be safely concluded that the
word territory in the first paragraph of Section 197 is meant to be
synonymous with "land area" only. The words and phrases used in a
statute should be given the meaning intended by the legislature . The sense
in which the words are used furnished the rule of construction.
The distinction between "territory" and "land area" which

respondents make is an artificial or strained construction of the
disputed provision whereby the words of the statute are arrested from
their plain and obvious meaning and made to bear an entirely
different meaning to justify an absurd or unjust result. The plain
meaning in the language in a statute is the safest guide to follow in
construing the statute. A construction based on a forced or artificial
meaning of its words and out of harmony of the statutory scheme is
not to be favored. 250 (Emphasis ours and citations omitted)
Though made in reference to the previous Local Government Code or

Batas Pambansa Blg. (BP) 337, the above-cited ruling remains relevant in
determining an LGU's territorial jurisdiction under the 1991 Local
Government Code. Section 197 of BP 337 251 cited the requisites for creating
a province, among which was a "territory," with a specified minimum area,
which did not need to be "contiguous" if it comprised two or more islands.
Tan, therefore, is clearly relevant since it explained the significance of the
word "contiguous," which is similarly used in the Local Government Code,
250
Id. at 645- 647.
251
AN ACT ENACTING A LOCAL GOVERNMENT CODE. Approved on February 10, 1983.
'4
in the determination of the LGU's territory. More importantly, it appears

that the framers of the Local Government Code drew inspiration from the
Tan ruling such that in lieu of the word "territory," they specified that such
requisite in the creation of the LGU shall refer to the land area. Thus, in his
book on the Local Government Code, Senator Pimentel who, in former
Chief Justice Reynato S. Puno's words, "shepherded the Code through the
labyrinthine process of lawmaking," wrote:
When a law was passed in the Batasan Pambansa creating the new
province ofNegros del Norte, the Supreme Court was asked to rule in Tan
v. Commission on Elections, whether or not the new province complied
properly with the ''territory" requirement that it must have no less then
[sic] 3,500 square kilometers.
The respondents claimed that "the new province has a territory of

4,019.95 square kilometers" by including in that computation not only the
land area, but also the "water over which said province had jurisdiction
and control," and "the marginal sea within the three mile limit."
The Supreme Court ruled that such an interpretation is strained,

incorrect and fallacious. The Court added that the use of the word
"territory" in the Local Government Code clearly reflected that "territory"
as therein used had reference only to the mass of land area and excluded
the waters over which the political unit exercises control.
Inspired by this Supreme Court ruling, the Code now uses the
words "land area" in lieu of "territory" to emphasize that the area
required of an LGU does not include the sea for purposes of
compliance with the requirements of the Code for its creation. 252
(Emphasis ours)
Tan, in fact, establishes that an LGU may have control over the waters
but may not necessarily claim them as part of their territory. This supports
the Court's finding that the exercise of authority does not determine the
LGU's territorial jurisdiction.
It is true that under Sections 442 and 450 of the Local Government
Code, "(t)he requirement on land area shall not apply" if the municipality or
city proposed to be created is composed of one or more islands. This does
not mean, however, that the territory automatically extends to the waters
surrounding the islands or to the open sea. Nowhere in said provisions is it
even remotely suggested that marine waters, or for that matter the
continental shelf, are consequently to be included as part of the territory.
The provisions still speak of "islands" as constituting the LGU, and under
Article 121 of the UNCLOS, an island is defined as "a naturally formed
area of land, surrounded by water, which is above water at high tide." The
inapplicability of the requirement on land area only means that where the
252
Aquilino Q. Pimentel, Jr., The Local Government Code, 2011 Edition, p. 44.
~
proposed municipality or city is an island, or comprises two or more islands,

it need not be identified by metes and bounds or satisfy the required
minimum area. In that case, the island mass constitutes the area of the
municipality or city and its limits are the island's natural boundaries.
Significantly, during the Senate deliberations on the proposed Local

Government Code, then Senate President Jovito Salonga suggested an
amendment that would extend the territorial jurisdiction of municipalities
abutting bodies of water to at least two kms from the shoreline. The ensuing
exchange is worth highlighting:
The President. Here is a proposed amendment: Line 17, to add

the following: FOR MUNICIPALITIES ABUTTING BODIES OF
WATER THEIR TERRITORIAL JURISDICTION SHALL EXTEND TO
AT LEAST TWO KILOMETERS FROM THE SHORELINE;
PROVIDED, THAT IN CASE THERE ARE TWO OR MORE
MUNICIPALITIES ON EITHER SIDE OF SUCH A BODY OF WATER
MAKING THE TWO-KILOMETER JURISDICTION INADVISABLE
THE JURISDICTION OF THE AFFECTED MUNICIPALITIES SHALL
BE DETERMINED BY DRAWING A LINE AT THE MIDDLE OF
SUCH BODY OF WATER. This is only for municipalities abutting bodies
of water.
Senator Pimentel. Mr. President, may we invite the attention of
our Colleagues that in Book IV, page 273, we define what constitutes
municipal waters. And, the measurement is not two kilometers but three
nautical miles starting from the sea-line boundary marks at low tide.
Therefore, there may be some complications here. We are not against the
amendment per se. What we are trying to make of record is the fact that
we have to consider also the provision of Section 464 which defines
"MUNICIPAL WATERS". So, probably, we can increase the extension of
the territorial jurisdiction to three nautical miles instead of two kilometers
as mentioned in this proposed amendment.
In fact, Mr. President, it is also stated at the last sentence of Section

464:
Where two municipalities are so situated on the

opposite shores that there is less than six nautical miles of
marine water between them, the third line shall be aligned
equally distant from the opposite shores of the respective
municipalities.
So, there is an attempt here to delineate, really, the jurisdiction of

the municipalities which may have a common body of water, let us say, in
between them.
The President. So, that is acceptable, provided that it is three

nautical miles?
Senator Pimentel. Yes. Probably, Mr. President, what we can do is

hold in abeyance this proposed amendment and take it up when we reach
~
Decision ·61 G.R. Nos. 170867 and 185941
Section 464. I think, it will be more appropriate in that section, Mr.

President.
The President. But, if it is a question of territorial jurisdiction,

may not this be the proper place for it?
Senator Pimentel. All right, Mr. President, what we can do is, we

will accept the proposed amendment, subject to the observations that we
have placed on record.
The President. All right. Subject to the three-nautical-mile limit.
Senator Saguisag. Mr. President.
The President. Senator Saguisag is recognized.
Senator Saguisag. I just would like to find out, Mr. President, if

we are codifying something that may represent the present state of the law,
or are we creating a new concept here? Ang ibig po bang sabihin nito ay
mayroong magmamay-ari ng Pasig River? Kasi, I do not believe that we
have ever talked about Manila owning a river or Manila owning Manila
Bay. Is that what we are introducing here? And what are its implications?
Taga-Maynila lamang ba ang maaaring gumamit niyan at sila lamang ang
magpapasiya kung ano ang dapat gawin o puwedeng pumasok a.Ilg coast
guard? What do we intend to achieve by now saying that ...
The President. Inland waters lamang naman yata ang pinag-

uusapang ito.
Senator Saguisag. Opo. Pero, I am not sure whether there is an

owner of the Pasig River. I am not sure. Maybe, there is. Pero, my own
recollection is that we have never talked of that idea before. I do not know
what it means. Does it mean now that the municipality owning it can
exclude the rest of the population from using it without going through
licensing processes? Ano po ang gusto nating gawin dito?
Ang alan1 ko ho riyan, they cannot be owned in the sense that they
are really owned by every Filipino. Iyon lamang po. Kasi, capitals po ang
naririto sa page 273, baka bago ito. Pero, ano po ba and ibig sabihin nito?
In my study of property before, hindi ko narinig ... So, maybe, we

should really reserve this as suggested by the distinguished Chairman.
The President. All right. Why do we not defer this until we can
determine which is the better place?
Senator Pimentel. Yes, Mr. President.
The President. All right. So let us defer consideration of this plus

the major question that Senator Saguisag is posing, is this something new
that we are laying down?
I
~
Decision 62 · G.R. Nos. 170867 and 185941
Senator Pimentel. No. Actually the definition of "municipal

waters" came about, really, because of several complaints that our
Committee has received from fisherpeople. They have complained that
the municipality is not able to help them, because the definition of
"municipal waters" has not been clearly spelled out. That is the reason
why we attempted to introduce some definitions of "municipal waters"
here, basically, in answer to the demands of the fisherfolk who believe that
their rights are being intruded upon by other people coming from other
places. Probably, the definition of municipal waters will also delineate the
criminal jurisdiction of, let us say, the municipal police in certain acts, like
dynamite fishing in a particular locality. It can help, Mr. President.
The President. Sa palagay ba ninyo, iyong Marikina River that

goes through several municipalities - we have the Municipality of Pasig,
then the Municipality of Marikina, then the Municipality of San Mateo,
and then the Municipality of Montalban - how will that be apportioned?
Senator Pimentel. If a river passes through several municipalities,

the boundary will be an imaginary line drawn at the middle of this river,
basically, Mr. President.
The President. Anyway, we will defer this until we reach Book

IV. 2s3
Based on the records of the Senate and the Bicameral Conference

Committee on Local Government, however, the Salonga amendment was not
considered anew in subsequent deliberations. Neither did the proposed
amendment appear in the text of the Local Government Code as approved.
By Senator Pimentel's account, the Code deferred to the Court's ruling in
Tan which excluded the marginal sea from the LGU's territory. It can, thus,
be concluded that under the Local Government Code, an LGU's territory
does not extend to the municipal waters beyond the LGU's shoreline.
The parties all agree that the Camago-Malampaya reservoir is located

in the continental shelf. 254 If the marginal sea is not included in the LGU's
territory, with more reason should the continental shelf, located miles
further, be deemed excluded therefrom.
To recapitulate, an LGU's territorial jurisdiction refers to its territorial

boundaries or to its territory. The territory of LGUs, in tum, refers to their
land area, unless expanded by law to include the maritime area.
Accordingly, only the utilization of natural resources found within the land
area as delimited by law is subject to the LGU's equitable share under
Sections 290 and 291 of the Local Government Code. This conclusion finds
support in the deliberations of the 1986 Constitutional Commission which
cited, as examples of national wealth the proceeds from which the LGU may
share, the Tiwi Geothermal Plant in Albay, the geothermal plant in Macban,
253
Record of the Senate, September I 0, 1990, pp. 959-960.
254
TSN, November 24, 2009, p. 7.
~
Makiling-Banahaw area in Laguna, the Maria Cristina area in Central

Mindanao, the great rivers and sources of hydroelectric power in Iligan, in
Central Mindanao, the geothermal resources in the area of Palimpifion,
Municipality of Valencia and mountainous areas, which are all situated
inland. 255 In his 2011 treatise on the Local Government Code, former
Senator Pimentel cited as examples of such national wealth, the geothermal
fields of Tongonan, Leyte and Palinpinon, Negros Oriental which are both
found inland. 256
Section 6 of the Local Government Code empowers Congress to

create, divide, merge and abolish LGUs, and to substantially alter their
boundaries, subject to the plebiscite requirement under Section 10 of the law
which reads:
Section 10. Plebiscite Requirement. - No creation, division,

merger, abolition or substantial alteration of boundaries of local
government units shall take effect unless approved by a majority of the
votes cast in a plebiscite called for the purpose in the political unit or units
directly affected. Said plebiscite shall be conducted by the Commission on
Elections (COMELEC) within one hundred twenty (120) days from the
date of effectivity of the law or ordinance effecting such action, unless
said law or ordinance fixes another date.
Accordingly, unless Congress, with the approval of the political units

directly affected, clearly extends an LGU's territorial boundaries beyond its
land area, to include marine waters, the seabe<l and the subsoil, it cannot
rightfully share in the proceeds of the utilization of national wealth found
therein.
No law clearly granting the

Province of Palawan territorial
jurisdiction over the Camago-
Malampaya reservoir
The Republic has enumerated the laws defining the territory of

Palawan. 257 The following table has been culled from said enumeration:
Governing Territorial Limits

Law
Act No. 422 258 The Province of Paragua shall consist of all that portion of the
Island of Paragua north of the tenth parallel of north latitude and the
255
Record of the 1986 Constitutional Commission, Volume III, pp. 178, 194 and 221.
256
Aquilino Q. Pimentel, Jr., The Local Government Code, 2011 Edition, p. 434.
257
Rollo (G.R. No. 170867), pp. 1595-1602.
258
AN ACT PROVIDING FOR THE ORGANIZATION OF A PROVINCIAL GOVERNMENT
IN THE PROVINCE OF PARAGUA, AND DEFINING THE LIMITS OF THAT PROVINCE. Approved
on June 23, 1902.
'4
small islands adjacent thereto, including Dumaran, and of the

islands forming the Calamianes Group and the Cuyos group.
(Section 2)
Act No. 567 259 I The Province of Paragua shall consist of all that portion of the
Island of Paragua north of a line beginning in the middle of the
channel at the mouth of the Ulugan River in the Ulugan Bay, thence
following the main channel of the Ulugan River to the village of
Bahile, thence along the main trail leading from Bahile to the Tapul
River, thence following the course of the Tapul River to its mouth in
the Honda Bay; except at the towns of Bahile and Tapul the west
boundary line shall be the arc of a circle with one mile radius, the
center of the circle being the center of the said towns of Bahile and
Tapul. There shall be included in the Province of Paragua the small
islands adjacent thereto, including Dumaran and the island forming
the Calamianes group and the Cuyos group. (Section 1)
Act No. 747 260 I The Province of Paragua shall consist of the entire Island of
Paragua, the Islands of Dumaran and Balabac, the Calamianes
Islands, the Cuyos Islands, the Cagayanes Islands, and all other
islands adjacent thereto and not included within ~he limits of any
province. (Section 1)
Act No.1363 261 I Upon the recommendation of the Philippine Committee on

Geographical Names the name of the Province and Island of
Paragua is hereby changed to that of Palawan. (Section 1)
Act No. 1396262 I The Province of Palawan shall include the entire Island of Palawan,
the Islands of Dumaran and Balabac, the Calamianes Islands, the
Cuyos Islands, the Cagayanes Islands, and all other islands
adjacent to these islands and not included within the limits of any
other province. (Section 26)
259
AN ACT AMENDING ACT NUMBERED FOUR AND TWENTY-TWO, PROVIDING FOR
THE ORGANIZATION OF A PROVINCIAL GOVERNMENT IN THE PROVINCE OF PARAGUAAND
DEFINING THE LIMITS OF THAT PROVINCE, BY FIXING NEW BOUNDARIES FOR THE
PROVINCE OF PARAGUA. Approved on December 22, 1902.
260
AN ACT TO AMEND ACT NUMBERED FOUR HUNDRED AND TWENTY-TWO, AS
AMENDED, BY DEFINING NEW LIMITS FOR THE PROVINCE OF PARAGUA AND FOR OTHER
PURPOSES. Approved on May 14, 1903.
261
AN ACT CHANGING THE NAME OF THE PROVINCE AND ISLAND OF PARAGUA TO
THAT OF PALAWAN. Approved on June 28, 1905.
262
AN ACT PROVIDING FOR THE ORGANIZATION OF PROVINCIAL GOVERNMENTS
OF THE PHILIPPINE ISLANDS, OTHER THAN THE MORO PROVINCE, WHICH ARE NOT
ORGANIZED UNDER THE PROVISIONS OF THE PROVINCIAL GOVERNMENT ACT NUMBERED
EIGHTY-THREE, AND REPEALING ACTS NUMBERED FORTY-NINE, THREE HUNDRED AND
THIRTY-SEVEN, FOUR HUNDRED AND TEN, FOUR HUNDRED AND TWENTY-TWO, FOUR
HUNDRED AND FORTY-ONE, FIVE HUNDRED, FIVE HUNDRED AND SIXTY-SIX, AND FIVE
HUNDRED AND SIXTY-SEVEN, AND SECTIONS ONE AND TWO OF ACT NUMBERED SEVEN
HUNDRED AND FORTY-SEVEN. Approved on September 14, 1905.
~
Act No. 2657 263 I Article II (Situs and Major Subdivisions of Provinces Other than
such as are Contained in Department of Mindanao and Sulu)
Section 43. Situs of Provinces and Major Subdivisions. - The

general location of the provinces other than such as are contained in
the Department of Mindanao and Sulu, together with the
subprovinces, municipalities, and townships respectively contained
in them is as follows:
xx xx
The Province of Palawan consists of the Island of Palawan, the

islands of Dumaran and Balabac, the Calamian Islands, the Cuyo
Islands, the Cagayanes Islands, and all other islands adjacent to
any of them, not included in some other province. It contains the
townships of Cagayancillo, Coron,. Cuyo, Puerto Princesa (the
capital of the province), and Taytay.
Act No. 2711 264 I Chapter 2 (Political Grand Divisions and Subdivisions)
Article I
Grand Divisions
Section 37. Grand divisions of (Philippines Islands) Philippines. -

The (Philippine Islands) Philippines comprises the forty-two
provinces named in the next succeeding paragraph hereof, the seven
provinces of the Department of Mindanao and Sulu, and the territory
of the City of Manila.
xx xx
The Province of Palawan consists of the Island of Palawan, the

islands of Dumaran and Balabac, the Calamian Islands, the Cuyo
Islands, the Cagayanes Islands, and all other islands adjacent to
any of them, not included in some other province, and comprises the
following municipalities: Agutaya, Bacuit, Cagayancillo, Coron,
Cuyo, Dumaran, Puerto Princesa (the capital of the province), and
Taytay.
The province also contains the following municipal districts:

Aborlan, Balabac and Brooke's Point.
As defined in its organic law, the Province of Palawan is comprised

merely of islands. The continental shelf, where the Camago-Malampaya
reservoir is located, was clearly not included in its territory.
263
AN ACT CONSISTING AN ADMINISTRATIVE CODE. Approved on December 31, 1916.
264
AN ACT AMENDING THE ADMINISTRATIVE CODE. Approved on March 10, 1917.
~
An island, as herein before-mentioned, is defined under Article 121 of

the UNCLOS as "a naturally formed area of land, surrounded by water,
which is above water at high tide." The continental shelf, on the other hand,
is defined in Article 76 of the same Convention as comprising "the seabed
and subsoil of the submarine areas that extend beyond (the coastal State's)
territorial sea throughout the natural prolongation of its land territory to the
outer edge of the continental margin, or to a distance of 200 nm from the
baselines from which the breadth of the territorial sea is measured where the
outer edge of the continental margin does not extend up to that distance."
Where the continental shelf of the coastal state extends beyond 200 nm,
Article 76 allows the State to claim an extended continental shelf up to 350
nm from the baselines. 265
Under Palawan's charter, therefore, the Camago-Malampaya reservoir

is not located within its territorial boundaries.
P.D. No. 1596, which constituted Kalayaan as a separate municipality

of the Province of Palawan, cannot be the basis for holding that the Camago-
Malampaya reservoir forms part of Palawan's territory. Section 1 of P.D.
No. 1596 provides:
SECTION 1. The area within the following boundaries:
KALAYAAN ISLAND GROUP
From a point [on the Philippine Treaty Limits] at latitude 7°40'

North and longitude 116°00' East of Greenwich, thence due West along
the parallel of 7° 40' N to its intersection with the meridian of longitude
112°10' E, thence due north along the meridian of 112°10' E to its
intersection with the parallel of 9°00' N, thence northeastward to the inter-
section of the parallel of 12°00' N with the meridian of longitude 114° 30'
E, thence, due East along the parallel of 12°00' N to its intersection with
the meridian of 118°00' E, thence, due South along the meridian of
longitude 118° 00' E to its intersection with the parallel of 10°00' N,
thence Southwestwards to the point of beginning at 7°40' N, latitude and
116° 00' E longitude; including the sea-bed, sub-soil, continental
margin and air space shall belong and be subject to the sovereignty of the
Philippines. Such area is hereby constituted as a distinct and separate
municipality of the Province of Palawan and shall be known as
"Kalayaan." (Emphasis ours)
None of the parties assert that the Camago-Malampaya reservoir is

within the territory of Kalayaan as delimited in Section 1 of P.D. No. 1596
or as referred to in R.A. No. 9522, 266 commonly known as the "2009
baselines law." The Province of Palawan, however, invokes P.D. No. 1596
265
Rollo (G.R. No. 170867), p. 1339.
266
AN ACT TO AMEND CERTAIN PROVISIONS OF . REPUBLIC ACT NO. 3046, AS
AMENDED BY REPUBLIC ACT NO. 5446, TO DEFINE THE ARCHIPELAGIC BASELINE OF THE
PHILIPPINES AND FOR OTHER PURPOSES. Approved on March 10, 2009.
~
to argue that similar to Kalayaan, its territory extends to the seabed, the
subsoil and the continental margin. The Court is not persuaded.
The delineation of territory in P.D. No. 1596 refers to Kalayaan alone.

The inclusion of the seabed, subsoil and continental margin in Kalayaan's
territory cannot, by simple analogy, be applied to the Province of Palawan.
To hold otherwise is to expand the province's territory, as presently defined
by law, without the requisite legislation and plebiscite.
The Court likewise finds no merit in the Province of Palawan's

assertion that R.A. No. 7611 establishes that the Camago-Malampaya area is
within the territorial jurisdiction of Palawan. It is true that R.A. No. 7611
contains a definition of "Palawan" that states:
Section 3. Definition of Terms. - As used in this Act, the following

terms are defined as follows:
(1) "Palawan" refers to the Philippine province composed of

islands and islets located 7°47' and 12°'22' north latitude and 117°'00' and
119°' 51' east longitude, generally bounded by the South China Sea to the
northwest and by the Sulu Sea to the east.
xx xx
Both the Republic and the Province of Palawan agree that the above
geographic coordinates, when plotted, would show that the Camago-
Malampaya reservoir is within the area described. However, no less than the
map267 submitted by the Province of Palawan showed that substantial
portions of Palawan's territory were excluded from the area so defined.
The Republic cites, without controversion from the province, that

portions of mainland Palawan and several islands, municipalities or portions
thereof, namely, the Municipalities of Balabac, Cagayancillo, Busuanga,
Coron, Agutaya, Magsaysay, Cuyo, Araceli, Linapacan and Dumaran were
excluded. 268 Their exclusion constitutes a substantial alteration of Palawan's
territory which, under Section 10 of the Local Government Code, cannot
take effect without the approval of the majority of the votes cast for the
purpose in a plebiscite in the political units directly affected.
There is also no showing that the criteria for the alteration, as

established in Sections 7 and 461 of the Local Government Code, had been
met. The definition, therefore, does not have the effect of redefining
Palawan's territory. In fact, R.A. No. 7611 was enacted not for such purpose
but to adopt a comprehensive framework for the -sustainable development of
Palawan compatible with protecting and enhancing the natural resources and
267
Rollo (G.R. No. 170867), p. 1395.
268
Id. at 1535.
+
endangered environment of the province. 269
The definitions under Section 1 of R.A. No. 7611 are also qualified by
the phrase "[A]s used in this Act." Thus, the definition of "Palawan" should
be taken, not as a statement of territorial limits for purposes of Section 7,
Article X of the 1987 Constitution, but in the context of R.A. No. 7611
which is aimed at environmental monitoring, research and education. 270
It is true, as the Province of Palawan has pointed out, that R.A. No.
7611 includes the coastal or marine area as one of the three components of
the Environmentally Critical Areas Network designated in said law, the other
two being the terrestrial component and the tribal ancestral lands. R.A. No.
7611 refers to the coastal or marine area as the whole coastline up to the
open sea, characterized by active fisheries and tourism activities. By all the
parties' accounts, however, the Camago-Malampaya reservoir, is located not
in such coastal or marine area but in the continental shelf. Thus, even on the
supposition that R.A. No. 7611 redefined Palawan's territory, it clearly did
not include the seabed and subsoil comprising the continental shelf. In fact,
what it expressly declares as composing the Province of Palawan are the
"islands and islets."
It is also clear that R.A. No. 7611 does not vest any additional
jurisdiction on the Province of Palawan. The PCSD, formed under said law,
is composed of both provincial officials and representatives from national
government agencies. It was also established under the Office of the
President. The tasks outlined by R.A. No. 7611, which largely involve policy
formulation and coordination, are carried out not by the province, but by the
council.
Thus, even if the Court were to apply the province's definition of

"territorial jurisdiction" as co-extensive with its exercise of authority, R.A.
No. 7611 cannot be considered as conferring territorial jurisdiction over the
Camago-Malampaya reservoir to Palawan since the law did not grant
additional power to the province.
It must be pointed out, too, that the Province of Palawan never alleged
in which of its municipalities or component cities and barangays the
Camago-Malampaya reservoir is located. Under Section 292 of the Local
Government Code, the local government's share in the utilization of national
wealth located in a province shall be allocated in the following ratio:
(1) Province - Twenty percent (20%);

(2) Component City/Municipality - Forty-five percent (45%); and
269
Section 4.
270
Sections 13, 14 and 15.
~
The allocation of the LGU share to the component city/municipality

and the barangay cannot but indicate that the natural resource is necessarily
found therein. This is only logical since a province is composed of
component cities and municipalities, and municipalities are in tum
composed of barangays. Senate deliberations on the proposed Local
Government Code also reflect that at bottom, the natural resource is located
in the municipality or component city:
Senator Rasul. Mr. President, may I continue. Also on the same

page, same section, "Share of Local Government in the Proceeds From
the Exploration", I propose that there should be a specific sharing in this
section, because this section does not speak of the sharing; how much goes
to the barangay, municipality, city, or province?
Senator Pimentel. Yes, in fact, we have Mr. President., and I was

about to read it into the record, so that, there will be a new paragraph after
the word "Resources on page 54, and it will read as follows:
THE SHARES OF THE LOCAL GOVERNMENT UNITS IN

THE PROCEEDS FROM THE EXPLANATION [sic], DEVELOPMENT
AND UTILIZATION OF NATURAL RESOURCES LOCATED WITHIN
THEIR TERRITORIAL JURISDICTIONS SHALL BE AS FOLLOWS:
1. IN THE CASE OF MUNICIPALITIES AND COMPONENT

CITIES: (A) THE BARANGAY UNIT WHERE THE NATURAL
RESOURCES ARE SITUATED AN EXTRACTED, FORTY PERCENT.
The President. Is there any objection? [Silence] Hearing none, the

amendment is approved.
Senator Pimentel. Then "(B)." "THE MUNICIPALITY OR

COMPONENT CITY WHERE THE BARANGAY WITH THE
NATURAL RESOURCES ARE SITUATED, THIRTY PERCENT.
The President. Is there any objection? [Silence] Hearing none, the

amendment is approved.
Senator Pimentel. Then we have a paragraph 2 on the same aspect

of sharing; "IN THE CASE OF HIGHLY URBANIZED CITIES, THE
FOLLOWING RULES SHALL APPLY;
A) BARANGAY WHERE THE NATURAL RESOURCES ARE

SITUARED AND EXTRACTED, SIXTY (60%) PERCENT;
B) FOR THE HIGHLY URBANIZED CITY WHERE THE

BARANGAY WITH THE NATURAL RESOURCES ARE LOCATED,
FORTY (40%) PERCENT".
So it is a 60:40 sharing.
4
The President. Before we use the word SITUATED, probably, we

should make it uniform - SITUATED AND EXTRACTED.
Senator Pimentel. AND EXTRACTED. Yes, Mr. President.
The President. Is there any objection? [Silence] Hearing one [sic],

the amendment is approved. Any more? 271 (Emphasis ours.)
During the oral argument, Dean Pangalangan, as amicus curiae,

stressed that the Camago-Malampaya reservoir is not part of any barangay:
JUSTICE CARPIO: Following your argument counsel Malampaya would

form part of one barangay in Palawan but yet it is outside of the Philippine
territorial waters, how do you reconcile that?
DEAN PANGALANGAN: Oh, no, Your Honor, Malampaya will lie

within our continental shelf and that is in fact the way by which we claim
title over a resource lying out there in the seas on the seabed. It will not be
considered in itself a barangay for instance.
JUSTICE CARPIO: So, it is not part of any barangay?
DEAN PANGALANGAN: Yes, Your Honor, it is not. 272
The Province of Palawan's failure to specify the component city or

municipality, or the barangay for that matter, in which the Camago-
Malampaya reservoir is situated militates against its claim that the area
forms part of its area or territory.
The Republic endeavored to enumerate the different LGUs composing

the Province of Palawan and their respective territorial limits under
applicable organic laws. 273 The following matrix has been culled from its
enumeration:
Governing Territorial Description/

LGU
Law Component Barangays
Cagayancillo Act No. 2657 Section 43. Situs of Provinces and Major
Coron Subdivisions. - The general location of the
Cuyo provinces other than such as are contained in the
Puerto Princesa274 Department of Mindanao and Sulu, together with
Taytay the subprovinces, municipalities, and townships
respectively contained in them is as follows:
271
Record of the Senate, November 17, 1990, pp. 1580-1581.
272
TSN, November 24, 2009, pp. 235-236.
273
Rollo (G.R. No. 170867), pp. 1596-1602.
274
Subsequent Act No. 2711, or the Administrative Code of 1917, also designated Puerto Princesa
as the capital of the Province of Pala wan. RA 5906 created the City of Puerto Prirn.;esa; Section 2 thereof
states that the City shall comprise the present territorial jurisdiction of the Municipality of Puerto Princesa."
On March 26, 2007, President Gloria Manacapaga-Arroyo issued Proclamation No. 1264 entitled
"Conversion of the City of Puerto Princesa into a Highly Urbanized City," reclassifying Puerto Princesa
City as a "highly urbanized city."
+
xx xx
The Province of Palawan consists of the Island of

Palawan, the islands of Dumaran and Balabac, the
Calamian Islands, the Cuyo Islands, the
Cagayanes Islands, and all other islands adjacent
to any of them, not included in some other
province. It contains the townships of
Cagayancillo, Coron, Cuyo, Puerto Princesa
(the capital of the province), and Taytay.
Act No. 2711 I Section 37. Grand divisions of (Philippines

Islands) Philippines. - The (Philippine Islands)
Philippines comprises the forty-two provinces
named in the next succeeding paragraph hereof,
the seven provinces of the Department of
Mindanao and Sulu, and the territory of the City
of Manila.
xx xx
The Province of Palawan consists of the Island of

Palawan, the islands of Dumaran and Balabac, the
Calamian Islands, the Cuyo Islands, the
Cagayanes Islands, and all other islands adjacent
to any of them, not included in some other
province, and comprises the following
municipalities: Agutaya, Bacuit, Cagayancillo,
Coron, Cuyo, Dumaran, Puerto Princesa (the
xx xx
Roxas R.A. No. I Section 1. The barrios of Tinitian, Caramay, Rizal,

615 275 Del Pilar, Malcampo Tumarbong, Taradufigan,
Ilian, and Capayas in the municipality of Puerto
Princesa, Province of Palawan, are hereby
separated from said municipality and constituted
into a new municipality to be known as the
Municipality of Roxas. The seat of the
government of the new municipality shall be at the
sitio of Barbacan in the barrio of Del Pilar, Puerto
Princes a.
Agutaya Act No. 2711 I Section 37. Grarid divisions of (Philippines

Bacuit (now Islands) Philippines. - x x x x
El Nido) 276 The Province of Palawan consists of the Island of
Dumaran Palawan, the islands of Dumaran and Balabac, the
Aborlan Calamian Islands, the Cuyo Islands, the
Balabac Cagayanes Islands, and all other islands adjacent
275
AN ACT CREATING THE MUNICIPALITY OF ROXAS, PROVINCE OF PALAWAN.
Approved on May 15, 1951.
276
R.A. No. 1140, entitled AN ACT CHANGING THE NAME OF THE MUNICIPALITY OF
BACUIT IN THE PROVINCE OF PALAWAN TO EL NIDO, approved on June 17, 1954, changed the
name ofBacuit to El Nido.
+
Brooke's Point to any of them, not included in some other

province, and comprises the following
municipalities: Agutaya, Bacuit, Cagayancillo,
Coron, Cuyo, Dumaran, Puerto Princesa (the
The province also contains the following

municipal districts: Aborlan, Balabac and
Brooke's Point.
R.A No. RA 1111 changed the name of the Municipality of

1111 277 Dumaran to Araceli. However, under RA 3418, a
R.A. No. distinct and independent municipality, to be
3418 278 known as the Municipality of Dumaran, was
constituted from certain barrios of the
municipalities of Araceli, Roxas and Taytay.
Section 1 of RA 3418 provides· "The barrios of
Dumaran, San Juan, Bacao, Calasag and Bohol in
the Municipality of Araceli; the barrios of Ilian,
Capayas, and Leguit in the Municipality of Roxas;
and the barrios of Danleg and Pangolasian in the
Municipality of Taytay, all in the province of
Palawan, are separated from the said
municipalities, and are constituted into a distinct
and independent municipality, to be known as the
Municipality of Dumaran, with the seat of
government at the site of the barrio of Dumaran."
Busuanga R.A. No. Section 1. The barrios of Concepcion, Salvacion,

560279 Busuanga, New Busuanga, Buluang, Quezon,
Calawit, and Cheey in the Municipality of Coron
are separated from the said municipality and
constituted into a new and regular municipality to
be known as the Municipality of Busuanga, with
the present site of the barrio of New Busuanga as
the seat of the government.
R.A No. RA 5943 amended Section 1 of RA 560 to read as

5943 280 follows: "The barrios of Sagrada, Maglalambay,
Bogtong, San Isidro, Pallitan, San Rafael,
Concepcion, Salvacion, Busuanga, Buluang,
Quezon, Calawit, and Cheey, in the Municipality
of Coron, Province of Palawan, are separated from
said municipality and constituted into a new
Municinalitv of Busuanga with the present site
277
AN ACT CHANGING THE NAME OF THE MUNICPALITY OF DUMARAN, PROVINCE
OF PALAWAN, TO ARACELI. Approved on June 15, 1954.
278
AN ACT CREATING THE MUNICIPALITY OF DUMARAN IN THE PROVINCE OF
PALAWAN. Enacted on June 18, 1961.
279
AN ACT TO CREATE THE MUNICIPALITY OF BUSUANGA IN THE PROVINCE OF
PALAWAN. Approved on June 17, 1950.
280
AN ACT AMENDING SECTION ONE OF REPUBLIC ACT NUMBERED FIVE HUNDRED
SIXTY, ENTITLED "AN ACT CREATING THE MUNICIPALITY OF BUSUANGA IN THE PROVINCE
OF PALAWAN." Approved on June 21, 1969.
4
of the barrio of Salvacion as the seat of the

government."
Quezon R.A. No. Section 1. The barrios of Berong and Alfonso XII
617281 in the Municipality of Aborlan and the barrios of
Iraai~, Candawaga and Canipaan in the
Municipality of Brook's Point are separated from
the said municipalities and constituted into a new
and regular municipality to be known as the
Municipality of Quezon, with the present site of
the barrio of Alfonso XIII as the seat of the
government.
Linapacan R.A.No. Section 1. The islands of Linapacari, Cabunlaoan,

1020282 Niangalao, Decabayotot, Calibanbangan, Pical,
and Barangonan are hereby separated from the
Municipality of Coron, Province of Palawan. and
constituted into a municipality to be known as tlie
Municipality of Linapacan with the seat of
government in the barrio of San Miguel in the
island of Linapacan.
Araceli Act No. 2711 Comprises the original territorial jurisdiction of

R.A. No. 1111 the Municipality of Dumaran under Act No. 2711,
R.A. No. 3418 excluding the barrios of Dumaran, San Juan,
Baca:o, Calasag and Bohol which were included in
the newly created Municipality of Dumaran under
RA3418.
Batarasa R.A. No. Section 1. The barrios of Inogbong, Marangas,

3425 283 Bonobono, Malihod, Bulalakaw, Tarusan, lwahi·g,
Iganigang, Sarong, Akayan, Rio Tuba, Sumbiling,
Sapa, Malitub, Puring, Buliluyan and Tahod in the
Municipality of Brooke's Point, Province of
Palawan, are separated from said municipality and
constituted into a distinct and independent
municipality, to be known as the Municipality of
Batarasa, same province. The seat of government
of the new municipality shall be in the present site
of the barrio of Marangas.
Magsaysay R.A. No. Section 1. The barrios of Los Angeles, Rizal,

3426 284 Lucbuan, Igabas, Imilod, Balaguen, Danawan,
Cocoro, Patonga, Tagawayan Island, Siparay
Island and Canipo in the Municipality of Cuvo,
281
AN ACT TO CREATE THE MUNICIPALITY OF QUEZON IN THE PROVINCE OF
PALAWAN. Approved on May 15, 1951.
282
AN ACT TO CREATE THE MUNICIPALITY OF LINAPACAN IN THE PROVINCE OF
283
AN ACT CREATING THE MUNICIPALITY OF BATARASA IN THE PROVINCE OF
PALAWAN. Enacted without Executive approval on June 18, 1961.
284
AN ACT CREATING THE MUNICIPALITY OF MAGSAYSAY IN THE PROVINCE OF
~
Province of Palawan, are separated froin said

municipality and constituted into a distinct and
independent municipality, to be known as the
Municipality of · Magsaysay. The seat of
government of the new municipality shall be the
present site of the barrio of Danawan.
San Vicente R.A. No. Section 1. The barrios of Binga, New Canipo,
5821 285 Alimanguan and New Agutaya, now in the
Municipality of Taytay and all barrios from
Vicente to Caruray in the Municipality of Puerto
Princesa, Province of Palawan, are separated from
said municipalities, and constituted into a distinct
and independent municipality, to be known as the
Municipality of San Vicente, same province. The
seat of government of the municipality shall be in
the present site of the barrio of San Vicente.
Narra R.A. No. Section 1. The barrios of Malatgao, Tinagong-

5642 286 dagat, Taritien, Antipoloan, Teresa, Panacan,
Narra, Caguisan, Batang-batang, Bato-bato,
Barirao, Malinao, Sandoval, Dumaguefia, El Vita,
Calategas, Arumayuan, Tacras, Borirao and that
part of barrio Abo-abo now belonging to the
Municipality of Aborlan, Province of Palawan, are
separated from said municipality and constituted
into a distinct and independent municipality, to be
known as the Municipality of Narra. The seat of
the new municipality shall be in the present site of
Barrio Narra.
Kalayaan P.D. No. 1596 Section 1. The area within the following
boundaries:
KALAYAAN ISLAND GROUP
From a point [on the Philippine Treaty Limits] at

latitude 7°40 North and longitude 116°00 East of
1 1
Greenwich, thence due West along the parallel of

7° 40 1 N to its intersection with the meridian of
longitude 112°10 1 E, thence due north along the
meridian of 112°10 1 E to its intersection with the
parallel of 9°00 N, thence northeastward to the
1
inter-section of the parallel of 12°00 N with the

1
meridian of longitude 114° 30' E, thence, due East

along the parallel of 12°00 1 N to its intersection
with the meridian of 118°00' E, thence, due South
along the meridian of longitude 118° 00 E to its
1
intersection with the parallel of 10°00' N, thence

285
AN ACT CREATING THE MUNICIPALITY OF SAN VICENTE IN THE PROVINCE OF
286
AN ACT CREATING THE MUNICIPALITY OF NARRA, PROVINCE OF PALAWAN.
Approved June 21, 1969.
~
Southwestwards to the point of beginning at 7°40'

N, latitude and 116° 00' E longitude; including
the sea-bed, sub-soil, continental margin and air
space shall belong to and be subject to the
sovereignty of the Philippines. Such area is
hereby constituted as a distinct and separate
municipality of the Province of Palawan and
shall be known as "Kalayaan."
Marcos (now BP Section 1. The barangays of Bunog, Iraan, Punta

Rizal) 287 Blg. 386288 Baj a, Capung Ulay, Ram.sang, Candawag,
Culasian, Panalingaan, Tabuin, Latud, and
Canipaan are hereby separated from the
Municipality of Quezon, Province of Palawan, and
constituted into a distinct and independent
municipality to be known as the Municipality of
Marcos. The seat. of government of the new
municipality will be in Barangay Punta Baja.
Section 2. The Municipality of Marcos shall be

bounded as follows:
"A parcel of land known as the proposed

Municipality of Marcos, in the Province of
Palawan, Luzon Island, bounded in the north
along lines 11 and 1 in the Plan by the municipal
boundary of Quezon, on the south along lines 2
and 3 by Sulu Sea, on the east along lines 1 and 2
by the municipal boundary of Brooke's Point, on
the west along lines 3 to 11 by the shoreline of the
South China Sea. Beginning at the point marked 1
in the plan at latitude 8° 59' 1O" T north, longitude
117° 50' 32"; thence S 62-00W 80,750 meters to
point 2; thence N 85-00W 5,800 meters to point 3;
thence N 31-29E 20,670.35 meters to point 4;
thence N 52-21E · 6,137.67 meters to point 6;
thence S 48-IOE 14,442.69 meters to point 12,
containing an area of nine hundred seventy-seven
million, two hundred sixty-one thousand two
hundred square meters (977 ,261,200 square
meters) or ninety-seven thousand seven hundred
twentv-six and twelve hundredth hectares
287
AN ACT CHANGING THE NAME OF THE MUNICIPALITY OF MARCOS, PROVINCE
OF PALAWAN, TO MUNICIPALITY OF DR. JOSE P. RIZAL. Enacted without executive approval on
April 17, 1988.
288
AN ACT CREATING THE MUNICIPALITY OF MARCOS IN THE PROVINCE OF
PALAWAN. Approved on April 14, 1983.
I
~
(97,726.12 hectares)."
Cul ion R.A. No. Section 1. The Islands of Culion Leper Colony,
7193 289 Marily, Sand, Tampel, Lamud, Galoc, Lanka,
as amended by Tambon, Dunaun, Alava, Chindonan and a small
R.A. No. island without a name situated directly south of
9032 290 Chindonan Island in latitude 11°55'N, longitude
12°02'E, comprising the national reservation for
lepers in the Province of Palawan as described
under Executive Order No. 35, Series of 1912, are
hereby constituted into a distinct and independent
municipality to be known as the Municipality of
Culion. The seat of government of the new
municipality shall be in Barangay Balala.
Section 1-A. The barangays of Balala, Baldat,

Binudac, Culango, Galoc, Jardin, Libis, Luac,
Malaking Patag, Osmefia and Tiza which have
been existing and functioning as regular barangays
before the creation of the municipality in 1992 are
hereby declared as legally existent upon the
creation of the Municipality of Culion. These
barangays shall comprise the Municipality of
Culion, subject to the provisions of the succeeding
paragraphs. The territorial boundaries of these
barangays are specified in Annex "A" of this Act.
Subject to the provisions of Section 10, Republic

Act No. 7160, Burabod and Halsey in the
Municipality of Busuanga, Province of Palawan,
are hereby separated from said municipality and
are transferred as part of the political jurisdiction
of the Municipality of Culion.
A barangay for the indigenous cultural

communities to be known as Barangay Carabao is
hereby created to be composed of the following
sitios, namely: Bacutao, Baracuan, Binabaan,
Cabungalen, Corong, De Carabao (Lumber
Camp), Igay, Layang-layang, Marily Pula and
Pinanganduyan."
Section 2. The Municipality of Culion shall be

bounded and described as follows:
The municipality shall be bounded on the north by

the Municipality of Busuanga-Coron Island with
Concepcion and Salvacion in the Calamian Island
289
AN ACT CREATING THE MUNICIPALITY OF CULTON IN THE PROVINCE OF
PALAWAN. Approved on February 19, 1992.
290
AN ACT EXPANDING THE AREA OF JURISDICTION OF THE MUNICIPALITY OF
CULTON, PROVINCE OF PALAWAN, AMENDING FOR THE PURPOSE REPUBLIC ACT NO. 7193.
Approved on March 12, 2001.
Group; on the south by the Municipality of

Bacuit-Taytay and Linapacan area; on the east by
the South China Sea; on the west by the Cuyo
West Pass.
The land contained in all the above named islands

in Section One is shown on C.G. Map No. 471.7
published in Washington D.C., September, 1908,
and lies within the following limits, i.e. between
the parallels of 11°36'N and 12°03 'N, and the
meridians of 119°47'E and 120°15'E.
Sofronio R.A. No. Section 1. Barangays Pulot Center, Pulot Shore

Espanola 7679 291 (Pulot I), Pulot Interior (Pulot II,) Iraray, Punang,
Labqg, Panitian, Isurnbo, and Abo-Abo in the
Municipality of Brooke's Point, Province of
Palawan, are hereby separated from the
Municipality and constituted into a distinct and
independent municipality of the province, to be
known as the Municipality of Sofronjo
Espanola. The seat of government of the new
municipality shall be in Barangay Pulot Center.
Section 2. The boundary of the Municipality of

Sofronio Espanola is described as follows:
Corner Latitude Longitude Location

1 8°53'50.23" 118° 00'20.28" on the southern
side of Caramay
Bay
2 8°59'58.0 I" 117°51 '24.42" on the slopes of
Mantalingahan
Range
3 9°01'01.84" 117°54'03 .69" on the slopes of
Mantalingahan
Range
4 9°02'52.18" 117°54'29.33" on the slopes of
Mantalingahan
Range
5 9°04'18.78" 111°ss·1s.11" on the slopes of
Mount Corumi
6 9°05'34. l 8" 117°55'18.00" on the slopes of
Pu1ot Range
7 9°07'49.27" 117°56'48.09" on the slopes of
Pulot Range
8 9°09'50.88" 117°59'50.82" on the slopes of
Malanut Range
9 9°11 '26.26" 118°03'49.28" on the slopes of
Malanut Range
10 9°11 '26.26" 118°03'49.28" on the slopes of
Malanut Range
11 9°08'58.93" 118°07'35.58" southern side,
mouth of
Abo-Abo River
291
AN ACT CREATING THE MUNICIPALITY OF SOFRONIO ESPANOLA IN THE
PROVINCE OF PALAWAN. Lapsed into law on February 24, 1994 without the President's signature.
~
Line Bearing Distance
1-2 N. 55° 23'W 19,886.37 m.

2-3 N. 68° 03'E 5,244.48 m.
3-4 N. 13° OO'E 3,478.91 m.
4-5 N. 28° 02'E 3,013.93 m.
5-6 N. 01° 44'E 2,317.35 m.
6-7 N. 33° 33'E 4.979.17 m.
7-8 N. 71° 16'E 5,892.79 m.
8-9 N. 16° lO'E 4,168.24 m.
9-10 N. 82° 50'E 6,170.26 m.
10-11 S. 56° SO'E 8,261.31 m.
11-1 SW, meandering mainland coastline.
The new municipality shall include the islands of

Bintaugan, Inamukan, Arrecife, Bessie, Gardiner,
and Tagalinog.
Based on the foregoing territorial descriptions, the municipalities of

Palawan do not include the continental shelf where the Camago-Malampaya
reservoir is concededly located. In fact, with the exception of Kalayaan,
which includes the seabed, the subsoil and the continental margin as part of
its demarcated area, the municipalities are either located within an island or
are comprised of islands. That only Kalayaan (under P.D. No. 1596), among
the municipalities of Palawan, had land submerged in water as part of its
area or territory, was confirmed by the amicus curiae, Atty. Bensurto, during
the oral argument as gleaned from the following exchange:
JUSTICE DE CASTRO: It is not a question of belonging to Palawan, it is

a question of Palawan having a share because it is within the area of
Palawan, that is the question before the Court now, it is not, the right to
govern is not in question, that is not the issue because we are very clear.
The Philippines is not a Federal Government xx x So, we are just defining
the area of the Province of Palawan, if it is not included in the polygon,
what about in other islands of Palawan, is there any continental shelf
in the other areas, ifthere is none here in the polygon, within the polygon
and which will extend up to the Camago-Malampaya, is there any other
continental shelf in the other islands comprising Palawan where there
is such a continental shelf that will extend up to the Camago-
Malampaya.
ATTY. HENRY BENSURTO: x x x x
[W]ith all due respect, Your Honor, I do not think Federalism or Unitary is
relevant in the issue of maritime concepts or maritime jurisdiction the end
would still be the same, Your Honor. Thank you.
JUSTICE DE CASTRO: You see that is my point, we are just here trying
to analyze domestic law and if, only P.D. 1596 refers to areas
submerged in water, that is (interrupted)
ATTY HENRY BENSURTO: Everything, Your Honor.
~
JUSTICE DE CASTRO: You find that only in 1596.
ATTY. HENRY BENSURTO: Yes, Your Honor. 292 (Emphasis ours)
The parties, however, agreed that the Camago-Malampaya reservoir

lies outside the geographic coordinates mentioned in P.D. No. 1596 which
constituted Kalayaan as a distinct municipality of Palawan. Atty. Bensurto
also confirmed during the oral argument that "the area of Malampaya is not
within the polygon area described under P.D. [No.]1596." 293 The succeeding
exchange between Atty. Bensurto and Associate Justice Teresita Leonardo-
De Castro (Justice De Castro) illumines:
JUSTICE DE CASTRO: Now, the question is - if in the other islands even

assuming that there is a continental shelf which extends up to Camago
there is now that legal question of whether that belongs to Palawan,
whether Palawan, that is within the area of Palawan even if it is protruding
from an island in Palawan because there is no such law like P.D. 1596
pertaining to the other islands?
ATTY. HENRY BENSURTO: Yes, Your Honor.
JUSTICE DE CASTRO: So, if there is none and Camago is in the

continental shelf protruding from any other island in Palawan and
then we cannot apply 1596?
ATTY. HENRY BENSURTO: No, Your Honor.
JUSTICE DE CASTRO: All right, so, there maybe some doubt as to

whether or not Palawan should have a bigger· share in that Camago-
Malampaya?
ATTY. HENRY BENSURTO: Yes, Your Honor.
JUSTICE DE CASTRO: Okay, that is clear now. Thank you. 294 (Emphasis
ours)
Estoppel does not lie against the

Republic
Fundamental is the rule that the State cannot be estopped by the

omission, mistake or error of its officials or agents. 295 Thus, neither the
DoE 's June 10, 1998 letter to the Province of Palawan nor President Ramos'
A.O. No. 381, which acknowledged Palawan's share in the Camago-
Malampaya project, will place the Republic in estoppel as they had been
292
TSN, November 24, 2009, pp. 196-200.
293
TSN, November 24, 2009, p. 166.
294
TSN, November 24, 2009, pp. 201-202.
295
Rep. of the Phils v. Roxas, et al., 723 Phil. 279, 311 (2013) citing Republic of the Phils. v. Hon.
Mangotara, et al., 638 Phil. 353 (2010).
I
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based on a mistaken assumption of the LGU's entitlement to said allocation.
Erroneous application and enforcement of the law by public officers

do not preclude subsequent corrective application of the statute. 296 As the
Court explained inAdasa v. Abalos: 297
True indeed is the principle that a contemporaneous interpretation

or construction by the officers charged with the enforcement of the rules
and regulations it promulgated is entitled to great weight by the court in
the latter's construction of such rules and regulations. That does not,
however, make such a construction necessarily controlling or binding. For
equally settled is the rule that courts may disregard contemporaneous
construction in instances where the law or rule construed possesses no
ambiguity, where the construction is clearly erroneous, where strong
reason to the contrary exists, and where the court has previously given the
statute a different interpretation.
If through misapprehension of law or a rule an executive or

administrative officer called upon to implement it has erroneously
applied or executed it, the error may be corrected when the true
construction is ascertained. If a contemporaneous construction is found
to be erroneous, the same must be declared null and void. Such principle
should be as it is applied in the case at bar. 298 (Emphasis ours)
Section 1, Article X of the 1987

Constitution did not apportion the
entire Philippine territory among
the LGUs
Dean Pangalangan shares the Province of Palawan's claim that based

on Section 1, Article X of the 1987 Constitution, the entire Philippine
territory is necessarily divided into political and territorial subdivisions, such
that at any one time, a body of water or a piece of land should belong to
some province or city. 299 The Court finds this position untenable.
Section 1, Article X of the 1987 Constitution states:
Section 1. The territorial and political subdivisions of the

Republic of the Philippines are the provinces, cities, municipalities,
and barangays. There shall be autonomous regions in Muslim Mindanao
and the Cordilleras as hereinafter provided. (Emphasis ours)
By indicating that the LGUs comprise the territorial subdivisions of

the State, the Constitution did not ipso facto make every portion of the
national territory a part of an LGU's territory.
296
National Amnesty Commission v. COA, 481 Phil. 279 (2004).
297
545 Phil. 168 (2007).
298
Id. at 186.
299
TSN, November 24, 2009, p. 232.
'f
The above-quoted section is found under the General Provisions of

Article X on Local Government. Explaining this provision, the eminent
author and member of the 1986 Constitutional Commission, Fr. Joaquin G.
Bernas, S.J. wrote:
The existence of "provinces" and "municipalities" was already

acknowledged in the 1935 Constitution. Section 1, however, when first
enacted in 1973, went a step further than mere acknowledgment of their
existence and recognized them, together with cities and barrios, as "(t)he
territorial and political subdivisions of the Philippines." Thus, the
municipalities, and barrios (now barangays) have been fixed as the
standard territorial and political subdivisions of the Philippines. To
these the 1987 Constitution has added the "autonomous regions." But the
Constitution allows only two regions: one for the Cordilleras and one for
Muslim Mindanao. The creation of other autonomous regions whether by
dividing the Cordilleras or Muslim Mindanao into two or by creating
others outside these two regions, can be accomplished only by
constitutional amendment.
xx xx
Neither Section 1, however, nor any part of the Constitution

prescribed the actual form and structure which individual local
government units must take. These are left by Sections 3, 18 and 20 to
legislation. As constitutional precepts, therefore, they are very
general. x x x
xx xx
The designation by the 1973 Constitution of provinces, cities,

municipalities and barangays as the political and territorial subdivisions of
the Philippines effected a measure of institutional instability. To this
extent, it was a move in the direction of real local autonomy. The 1987
Constitution moved farther forward by authorizing the creation of
autonomous regions. These are the passive aspects of local autonomy.
The dynamic and more important aspect of local autonomy must be
measured in terms of the scope of the powers given to the local units. 300
(Emphasis ours)
There is, thus, merit in the Republic's assertion that Section 1, Article
X of the 1987 Constitution was intended merely to institutionalize the
LGUs.
The Court is further inclined to agree with the Republic's argument

that assuming Section 1 of Article X was meant to divide the entire
Philippine territory among the LGUs, it cannot be deemed as self-executing
and legislation will still be necessary to implement it. LGU s are constituted
300
The 1987 Constitution of the Republic of the Philippines, A Commentary, 1996 Edition, pp.
960-961.
~
by law and it is through legislation that their respective territorial boundaries

are delineated. Furthermore, in the creation, division, merger and abolition
of LGUs and in the substantial alteration of their boundaries, Section 10 of
Article X requires satisfying the criteria set by the Local Government Code.
It further requires the approval by the majority of the votes cast in a
plebiscite in the political units directly affected. Needless to say,
apportionment of the national territory by the LGUs, based solely on the
general terms ·of Section 1 of Article X, may only sow conflict and
dissension among these political subdivisions.
As the Republic asserted, no law has been enacted dividing the

Philippine territory, including its continental margin and exclusive economic
zones, among the LGUs.
The UNCLOS did not confer on

LGUs their own continental shelf
Dean Pangalangan posited that since the Constitution has incorporated

into Philippine law the concepts of the UNCLOS, including the concept of
the continental shelf, Palawan 's "area" could be construed as including its
own continental shelf. 301 The Province of Palawan and Arigo, et al.
accordingly assert that Camago-Malampaya reservoir forms part of
Palawan's continental shelf. 302
The Court is unconvinced. The Republic was correct in arguing that

the concept of continental shelf under the UNCLOS does not, by the
doctrine of transformation, automatically apply to the LGUs. We quote with
approval its disquisition on this issue:
The Batasang Pambansa ratified the UNCLOS through Resolution

No. 121 adopted on February 27, 1984. Through this process, the
UN CLOS attained the force and effect of municipal law. But even if the
UNCLOS were to be considered to have been transformed to be part of the
municipal law, after its ratification by the Batasang Pambansa, the
UNCLOS did not automatically amend the Local Government Code and
the charters of the local government units. No such intent is manifest
either in the UNCLOS or in Resolution No. 121. Instead, the UNCLOS,
transformed into our municipal laws, should be applied as it is worded.
Verba legis.
xx xx
It must be stressed that the provisions under the UNCLOS are

specific in declaring the rights and duties of a state, not a local government
unit. The UN CLOS confirn1s the sovereign rights of the States over the
continental shelf and the maritime zones. The UNCLOS did not confer
101
TSN, November 24, 2009, pp. 217-218 and 224.
102
Rollo (G.R. No. 170867), pp. 37-38.
4
any rights to the States' local government units.
xx xx
At the risk of being repetitive, it is respectfully emphasized that the

foregoing indubitably established that under the express terms of the
UNCLOS, the rights and duties over the maritime zones and continental
shelf pertain to the. State. No provision was set forth to even suggest any
reference to a local government unit. Simply put, the UNCLOS did not
obligate the States to grant to, much less automatically vest upon, their
respective local government units territorial jurisdiction over the different
maritime zones and the continental shelf. Hence, contrary to the
submission of Dean Pangalangan, no such application can be made. 303
Atty. Bensurto took a similar stand, declaring during the oral

argument that: ·
ATTY. HENRY BENSURTO: x x x x [T]here was an assertion earlier,

Your Honor, that there was a reference in fact to the continental shelf, that
there is an automatic application of the continental shelf with respect to
the municipal territories. I submit, Your Honor that this should n<?t be the
case, why? Because the United Nation Convention on the Law of the
Sea which is the conventional law directly applicable in this case is an
International Law. International Law by definition is a body of rules
governing relations between sovereign States or other entities which
are capable of having rights and obligations under International Law.
Therefore, it is the· State that is the subject of International Law, the only
exception to this is ~ith respect to individuals with respect to the issue of
Humanitarian and Human Rights Law. From there, it flows the principal
[sic] therefore that International Law affects only sovereign States. With
respect to the relationship between the State and its Local Government
Units this is reserved to the sovereign right of the sovereign State. It is a
dangerous proposition for us to make that there is an automatic application
because to do that would mean a violation of the sovereign right of a State
and the State always reserves the right to promulgate laws governing its
domestic jurisdiction. Therefore, the United Nations Convention of the
Law of the Sea affects only the right of the Philippines vis a vis
another sovereign State. And so, when we talk of the different maritime
jurisdictions enumerated, illustrated and explained under the United
Nations Convention on the Law of the Sea we are actually referring to
inter state relations not intra state relations.xx x304 (Emphasis ours)
In fact, Arigo, et al. acknowledged during the oral argument that the
UNCLOS applies to the coastal state and not to their provinces, and tl~at
Palawan, both under constitutional and international, has no distinct and
separate continental shelf, thus:
303
Id. at 1514 and 1518.
304
TSN, November 24, 2009, pp. 156-158 ..
{
ASSOCIATE JUSTICE VELASCO: You admit that under UNCLOS it

is only the coastal states that are recognized not the provinces of the
coastal state.
ATTY. BA GARES: That is true, ·Your Honor, and we do not dispute

that, YouJ:'. Honor.
ASSOCIATE JUSTICE VELASCO: That's correct. And you cited that in

your petition ....
ATTY. BAGARES: Yes, Your Honor. That is true, Your Honor.
ASSOCIATE JUSTIUCE VELASCO: .... that under Article 76, it is the

continental shelf of the coastal state.
ATTY. BAGARES: Yes, Your Honor.
ASSOCIATE JUSTICE VELASCO: And in our case, the Republic of

the Philippines, right?
ATTY. BAGARES: Yes, Your Honor.
ASSOCIATE JUSTICE VELASCO: Okay. You also made the submission

that under Republic Act 7611 anq Administrative Order 381, there is a
provision there that serves as basis for, what you call again the continental
shelf of Palawan. What provisions in 7611 and AO 381 are there that
serves as basis, for you to say that there is such a continental shelf of
Palawan?
ATTY. BAGARES: Your Honor, I apologize that perhaps I've been like
Atty. Roque very academic in the language in which we make our
presentations but our position, Your Honor, exactly just to make· it clear,
Your Honor, we're not saying that there's a separate continental shelf uf
the Province of Palawan outside the territorial bounds of the sovereign
State of the Republic of the Philippines. We are only saying, Your Honor,
that that continental shelf is reckoned, Your Honor, from the Province of
Palawan. We are not saying, Your Honor, that there is a distinct and
separate continental shelf that Palawan may lay acclaim [sic] to,
under the Constitu.tional Law and under International Law, Your
Honor.
ASSOCIATE JUSTICE VELASCO: Alright. And that is only the

continental shelf of the coastal State, which is the Philippines.
ATTY. BAGARES. Yes, Your Honor. I hope that is clear, Your

Honor. 305 (Emphasis ours)
The Federal Paramountcy doctrine

as well as the Regalian and
Archipelagic doctrines are
inapplicable
10
' TSN, November 24, 2009, pp. 78-81.
~
Contrary to the Republic's submission, the LGU's share under Section

7, Article X of the 1987 Constitution cannot be denied on the basis of the
archipelagic and regalian doctrines.
The archipelagic doctrine is embodied in Article I of the 1987

Constitution which provides:
The national territory comprises the Philippine archipelago, with

all the islands and waters embraced therein, and all other territories over
which the Philippines has sovereignty or jurisdiction, consisting of its
terrestrial, fluvial, and aerial domains, including its territorial sea, the
seabed, the subsoil, the insular shelves, and other submarine areas. The
waters around, between, and connecting the islands of the archipelago,
regardless of their breadth and dimensions, form part of the internal waters
of the Philippines.
The regalian doctrine, in tum, is found in Section 2, Article XII of the

1987 Constitution which states:
Section 2. All lands of the public domain, waters, minerals, coal,

petroleum, and other mineral oils, all forces of potential energy, fisheries,
forests or timber, wildlife, flora and fauna, and other natural resources are
owned by the State. x x x
It is at once evident that the foregoing doctrines find no application in

this case which involves neither a question of what comprises the Philippine
territory or the ownership of all natural resources found therein.
There is no debate that the natural resources in the Camago-

Malampaya reservoir belong to the State. Palawan's claim is anchored not
on ownership of the reservoir but on a revenue-sharing scheme, under
Section 7, Article X of the 1987 Constitution and Section 290 of the Local
Government Code, that allows LGUs to share in the proceeds of the
utilization of national wealth provided they are found within their respective
areas. To deny the LGU's share on the basis of the State's ownership of all
natural resources is to render Section 7 of Article X nugatory for in such
case, it will not be possible for any LGU to benefit from the utilization of
national wealth.
Accordingly, the Court cannot subscribe to Atty. Bensurto's opinion306

that the Province of Palawan cannot claim the 40% LGU share from the
proceeds of the Camago-Malampaya project because the National
Government "remains to have full dominium" (or ownership rights) over the
gas reservoir.
306
Rollo (G.R. No. 170867), pp. 1355-1356.
--t
.
Atty. Bensurto's theory is ostensibly drawn from several U.S. cases,

namely US. v. California, 307 US. v. Louisiana, 308 US. v. Texas 309 and US. v.
Maine, 310 which the Republic also cites in applying the federal paramountcy
doctrine to the Province of Palawan's claim. To explain this doctrine, the
Republic turns to the case of Native Village ofEyak v. Trawler Diane Marie,
Inc., 311 where the U.S. Court of Appeals for the Ninth Circuit, in part, stated:
The "federal paramountcy doctrine" is derived, in essence, from

four Supreme Court cases in which the federal government and various
coastal states disputed ownership and control of the territorial sea and the
adjacent portions of the OCS.
The first of these cases was United States v. California, 332 U.S.
19, 67 S.Ct. 1658, 91 L.Ed. 1889 (1947), in which the United States sued
to enjoin the State of California from executing leases authorizing the
taking of petroleum, gas, and other mineral deposits from the Pacific
Ocean.xx x
xx xx
[T]hus, the Court declared, "California is not the owner of the three-mile
marginal belt along its coast." Instead, "the Federal Government rather
than the state has paramount rights in and power over that belt, an
incident to which is full dominion over the resources of the soil under that
water area, including oil."
Bolstered by the favorable outcome in California, the United States

brought similar actions to confirm its title to the seabed adjacent to other
coastal states. In United States v. Louisiana, 339 U.S. 699, 70 S.Ct. 914,
94 L.Ed. 1216 (1950), the United States brought suit against the State of
Louisiana, which argued that it held title to the seabed under the waters
extending twenty-seven miles into the Gulf of Mexico.xx x
xx xx
The Court found that the only difference between the argument
raised by Louisiana and the one raised by California was that Louisiana's
claimed boundary extended twenty-four miles beyond California's three-
mile claim. This difference did not weigh in Louisiana's favor, however:
If the three-mile belt is in the domain of the

Nation rather than that of the separate States, it follows
a fortiori that the ocean beyond that limit also is the
ocean seaward of the marginal belt is perhaps even more
directly related to the national defense, the conduct of
foreign affairs, and world commerce than is the marginal
sea. Certainly it is not less so far as the issues presented
307
332U.S.19(1947).
308
339 U.S. 699 (1950).
309
339 U.S. 707 (1950).
310
420 U.S. 515 (1975).
111
U.S. 9th Circuit, No. 97-35944, September 9, 1998.
here are concerned, Louisiana's enlargement of her

boundary emphasizes the strength of the claim of the
United States to this part of the ocean and the resources of
the soil under that area, including oil.
In the companion case to Louisiana, United States v. Texas, 339

U.S. 707, 70 S.Ct. 918, 94 L.Ed. 1221 (1950), the Supreme Court again
reaffirmed its holding in California. The State of Texas had, by statute,
extended its boundary first to a line twenty-four miles beyond the three-
mile limit, and thereafter to the outer edge of the continental shelf. Texas
raised a somewhat different argument than had either California or
Louisiana, one more analogous to that asserted by the Villages here. Texas
argued that, because it was a separate republic prior to its entry into the
United States, it had both dominium (ownership or proprietary rights) and
imperium (governmental powers of regulation and control) with respect to
the lands, minerals, and other products underlying the marginal sea. Upon
entering the Union, Texas transferred to the federal government its powers
of sovereignty-its imperium-over the marginal sea, but retained its
do mini um.
The Supreme Court was not persuaded. While the Republic of

Texas may have had complete sovereignty and ownership over the
marginal sea and all things of value derived therefrom, the State of Texas
did not. x x x "When Texas came into the Union, she ceased to be an
independent nation. The United States then took her place as respects
foreign commerce, the waging of war, the making of treaties, defense of
the shores, and the like." As an incident to the transfer of that sovereignty,
any "claim that Texas may have had to the marginal sea was
relinquished to the United States." The Court recognized that
"dominion and imperium are normally separable and separate";
however, in this instance, "property interests are so subordinated to
the rights of sovereignty as to follow sovereignty." x xx
xx xx
In the last of the paramountcy cases, United States v. Maine, 420

U.S. 515, 95 S.Ct. 1155, 43 L.Ed.2d 363 (1975), the United States brought
an action against the thirteen Atlantic Coastal States asserting that the
federal government was entitled to exercise sovereign rights over the
seabed and subsoil underlying the Atlantic Ocean to the exclusion of the
coastal states for the purpose of exploring the area and exploiting its
natural resources. x x x
At the urging of the coastal states, the Supreme Court reexamined

the decisions in California, Louisiana, and Texas. To the states' dismay,
the Court concluded that these cases remained grounded on sound
constitutional principles. Whatever interest the states may have held in
the sea prior to statehood, the Court held, as a matter of "purely legal
principle the Constitution allotted to the federal government jurisdiction
over foreign commerce, foreign affairs, and national defense and it
necessarily follows, as a matter of constitutional law, that as attributes of
these external sovereign powers the federal government has
~
paramount rights in the marginal sea." x x x. (Emphasis ours and

citations omitted)
There are several reasons why the foregoing doctrine cannot be

applied to this case. First, the U.S. does not appear to have an equitable
sharing provision similar to Section 7, Article X of the 1987 Constitution.
Second, the Philippines is not composed of states that were previously
independent nations. Third, the resolution of these cases does not necessitate
distinguishing between dominium and imperium since neither determines the
LGU's entitlement to the equitable share under Section 7 of Article X.
Fourth, the Court is not called upon to determine who between the Province
of Palawan and the National Government has the paramount or dominant
right to explore or exploit the natural resources in the marginal sea or
beyond. Fifth, adjudication of these cases does not entail upholding the
dominion of the National Government over a political subdivision since
ownership of the natural resources is concededly vested in the State. Sixth, it
is settled that dominion over national wealth belongs to the State under the
regalian doctrine. Ownership of the subject reservoir, therefore, is a non-
issue and what simply needs to be determined is whether said resource is
located within the area or territorial jurisdiction of the Province of Palawan.
Justice De Castro's observation during the oral argument is thus

apropos:
JUSTICE DE CASTRO: It is not a question of belonging to Palawan, it

is a question of Palawan having a share because it is within the area of
Palawan, that is the question before the Court now, it is not, the right to
govern is not in question, that is not the issue because we are very clear.
The Philippines is not a Federal Government so as distinguished from a
Federal Government where the sovereign authority came from the member
State and granted to the Federal Government, here we have the reverse it
is the central government giving to the local government certain powers
and defining the limits of these powers. So, in this case there is no
question about the right to govern, the local government have [sic] have
only such powers granted to it by the Local Government Code. Now, the
question is whether the Province of Palawan should have a share in
the proceeds in the development of the Camago-Malampaya because
it is within its area. So, we are just defining the area of the Province
of Palawan xx x. 312 (Emphasis ours)
LGU's share cannot be granted

based on equity
Atty. Bensurto opined that under the existing law, the Province of
Palawan is not entitled to the statutory 40% LGU share. He posited that it is
only on equitable grounds that the Province of Palawan could participate in
the proceeds of the utilization of the Camago-Malampaya reservoir. He
312
TSN, November 24, 2009, pp. 196-197.
4
concluded that from the perspective of the principle of equity, it may be

appropriate for the Province of Palawan to be given some share in the
operation of the Camago-Malampaya gas reservoir considering: (a) its
proximity to the province which makes the latter environmentally vulnerable
to any major accidents in the gas reservoir; and (b) the gas pipes that pass
through the northern part of the province. 313
The Court finds the submission untenable. Our courts are basically
courts of law, not courts of equity. 314 Furthermore, for all its conceded
merits, equity is available only in the absence of law and not as its
replacement. 315 As explained in the old case of Tupas v. Court ofAppeals: 316
Equity is described as justice outside legality, which simply means

that it cannot supplant although it may, as often happens, supplement the
law. We said in an earlier case, and we repeat it now, that all abstract
arguments based only on equity should yield to positive rules, which pre-
empt and prevail over such persuasions. Emotional appeals for justice,
while they may wring the heart of the Court, cannot justify disregard of
the mandate of the law as long as it remains in force. The applicable
maxim, which goes back to the ancient days of the Roman jurists - and
is now still reverently observed - is "aequetas nunquam contravenit
legis." 317
In this case, there are applicable laws found in Section 7, Article X of

the 1987 Constitution and in Sections 289 and 290 of the Local Government
Code. They limit the LGUs' share to the utilization of national wealth
located within their respective areas or territorial jurisdiction. As herein
before-discussed, however, existing laws do not include the Camago-
Malampaya reservoir within the area or territorial jurisdiction of the
Province of Palawan.
The pertinent positive rules being present here, they should preempt
and prevail over all abstract arguments based only on equity. 318
The supposed presence of gas pipes through the northern part of

Palawan cannot justify granting the province the 40% LGU share because
both the Constitution and the Local Government Code refer to the LGU
where the natural resource is situated. The 1986 Constitutional Commission
referred to this area as "the locality, where God chose to locate his bounty,"
while the Senate deliberations on the proposed Local Government Code
cited it as the area where the natural resource is "extracted." To hold
otherwise, on the basis of equity, will run afoul of the letter and spirit of both
313
Rollo (G.R. No. 170867), pp. 1344, 1355-1356.
314
GF Equity, Inc. v. Valenzona, 501 Phil. 153, 166 (2005).
315
Tupas v. Court ofAppeals, 271 Phil. 628 (1991).
316 Id.
317
Id. at 632-633.
318
Development Bank of the Philippines v. Carpio, G.R. No. 195450, February 1, 2017, 816 SCRA
473, 487.
~
constitutional and statutory law. It is settled that equity cannot supplant,

overrule or transgress existing law.
Furthermore, as the Republic noted, any possible environmental

damage to the province is addressed by the contractor's undertakings, under
the ECC, to ensure minimal impact on the environment and to set up an
Environmental Guarantee Fund that would cover expenses for
environmental monitoring, as well as a replenishable fund that would
compensate for any damage the project may cause. 319 The ECC, in pertinent
part, provides:
This Certificate is being issued subject to the following conditions:
1. This Certificate shall cover the construction of the shallow water

platform (SWP) in the Service Contract 38 (SC38) offshore northwest
Palawan, a pipeline from the Malampaya wells (well drilling site) to the
SWP passing the offshore route from Mindoro to a land terminal at Shell
Tabangao 's refinery plant in Batangas;
2. The proponent shall consider the offshore route of the pipeline

to minimize its environment socio-economic impacts particularly to the
province of Mindoro;
3. Selection of the SWP site and the final offshore pipeline route
should avoid environmentally sensitive areas such as coral reefs, sea grass,
mangroves, fisheries, pearl farms, habitats of endangered wildlife, tourism
areas and areas declared as protected by the national, provincial and local
government agencies. It shall also be routed away from geologically high
risk areas;
4. Proponent shall use the optimum amount of anti-corrosion

anodes necessary in order to maintain pipeline integrity and minimize
impacts on water quality;
5. The design of the pipeline shall conform to the

international standards that can handle extreme conditions. The proponent
shall ensure extensive monitoring (internal and external inspections) to
maintain the pipeline integrity;
xx xx
26. The proponent shall set up an Environmental Guarantee

Fund (EGF) to cover expenses for environmental monitoring and the
establishment of a readily available and replenishable fund to compensate
for whatever damage may be caused by the project, for the rehabilitation
and/or restoration of affected-areas, the future
abandonment/decommissioning of project facilities and other activities
related to the prevention of possible negative impacts.
319
Rollo (G.R. No. 170867), p. 1584.
-4
The amount and mechanics of the EGF shall be determined by the

DENR and the proponent taking into consideration the concerns of the
affected areas stakeholders and formalized through a MOA which shall be
submitted within ninety (90) days prior to project implementation. The
absence of the EGF shall cause the cancellation of this Certificate;
xx xx
29. In cases where pipe laying activities· will adversely affect

existing fishing grounds, the proponent in coordination with the Bureau of
Fisheries and Aquatic Resources (BFAR) shall identify alternative fishing
grounds and negotiate with affected fisherfolks the reasonable
compensation to be paid[.] 320
There is logic in the Republic's contention that the National

Government cannot be compelled to compensate the province for damages it
has not yet sustained.
The foregoing considered, the Court finds that the Province of

Palawan's remedy is not judicial adjudication based on equity but legislation
that clearly entitles it to share in the proceeds of the utilization of the
Camago-Malampaya reservoir. Mariano instructs that the territorial
boundaries must be clearly defined "with precise strokes." Defining those
boundaries is a legislative, not a judicial function. 321 The Court cannot, on
the basis of equity, engage in judicial legislation and alter the boundaries of
the Province of Palawan to include the continental shelf where the subject
natural resource lies. As conceded by Dean Pangalangan, "territorial
jurisdiction is fixed by a law, by a charter and that defines the territory of
Palawan very strictly," and it is "something that can be altered only in
accordance with [the] proper procedure ending with a plebiscite." 322
It is true that the Local Government Code envisioned a genuine and

meaningful autonomy to enable local government units to attain their fullest
development as self-reliant communities and make them effective partners in
the attainment of national goals. 323 This objective, however, must be
enforced within the extent permitted by law. As the Court held in Hon.
. .1r.
L zna, 1 u
v. 11on. p ano:
- 324
Nothing in the present constitutional provision enhancing local

autonomy dictates a different conclusion.
320
Id. at 1584-1586.
321
Supra note 235.
322
TSN, November 24, 2009, pp. 233 and 235.
323
Phil. Rural Electric Coop. Assoc, Inc. v. DILG Secretary, 451 Phil. 683, 698 (2003) citing
MCIAA v. Marcos, 330 Phil. 392, 417 (1996).
324
416 Phil. 438 (2001).
~
The basic relationship between the national

legislature and the local government units has not been
enfeebled by the new provisions in the Constitution
strengthening the policy of local autonomy. Without
meaning to detract from that policy, we here confirm that
Congress retains control of the local government units
although in significantly reduced degree now than under
our previous Constitutions. The power to create still
includes the power to destroy. The power to grant still
includes the power to withhold or recall. True, there are
certain notable innovations in the Constitution, like the
direct conferment on the local government units of the
power to tax (citing Art. X, Sec. 5, Constitution), which
cannot now be withdrawn by mere statute. By and large,
however, the national legislature is still the principal of the
local government units, which cannot defy its will or
modify or violate it.
Ours is still a unitary form of government, not a federal state.

Being so, any form of autonomy granted to local governments will
necessarily be limited and confined within the extent allowed by the
central authority. Besides, the principle of local autonomy under the
1987 Constitution simply means "decentralization." It does not make local
governments sovereign within the state or an "imperium in imperio. " 325
(Emphasis ours)
Constitutional challenge to E.O. No. 683
The challenge to the constitutionality of E.O. No. 683, brought by

Arigo, et al., is premised on the alleged violation of Section 7, Article X of
the 1987 Constitution and Sections 289 and 290 of the Local Government
Code, which is the basic issue submitted for resolution by the Republic and
the Province of Palawan in G.R. No. 170867. Considering its ruling in G.R.
No. 170867, the Court resolves to deny the Arigo petition, without need of
passing upon the procedural issues therein raised. The same ruling also
renders it unnecessary to rule upon the propriety of the Amended Order
dated January 16, 2006, which the Republic raised ad cauteiam in G.R. No.
170867.
WHEREFORE, the Petition in G.R. No. 170867 is GRANTED.

The Decision dated December 16, 2005 of the Regional Trial Court of the
Province of Palawan, Branch 95 in Civil Case No. 3779 is REVERSED and
SET ASIDE. The Court declares that under existing law, the Province of
Palawan is not entitled to share in the proceeds of the Camago-Malampaya
natural gas project. The Petition in G.R. No. 185941 is DENIED.
325
Id. at 448.
-4
SO ORDERED.
~/
NOEL GI
~
Ass ;itice
E TIJAM
WE CONCUR:
Associate Justice
~~?iLLO Associate Justice

ha~ '1/L¥
ESTELA ~)>ERLAS-HERNABE
Associate Justice
(no part)
~ FRANCIS H. JARDELEZA
Associate Justice
ALF ANDRE~~YES, JR.

Ass~c~te Justice
~~DO
~~~~iate Justice
/.lf/~~-
V~ssociate Justice
~_::d \
RAMO PAULL.HERNANDO
7.
(on leave)
ROSMARI D. CARANDANG
Associate Justice Associate Justice
CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution, I certify that
the conclusions in the above Decision had been reached in consultation
before the case was assigned to the writer of the opinion of the Court.
CERTIFIED TRUE COPY
. . .___ E~R O. ARICHETA

lerk of Court En Banc
Supreme Cgurt

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~epublic of tbe ~bilippines

REPUBLIC OF THE G.R. No. 170867

G.R. No. 170867 is a petition for review on certiorari 1 under Rule 45

G.R. No. 185941 is a petition for review on certiorarz-4 under Rule 45

The Camago-Malampaya Natural

On December 11, 1990, the Republic of the Philippines (Republic or

The nearest point of the Camago-Malampaya production area is at a

The quantity of natural gas contained in the Camago-Malampaya was

Service Contract No. 38, as clarified by the Memorandum of

entitled to receive an amount equal to sixty percent (60%) of the net

The Contractor was subsequently composed of the consortium of

Administrative Order No. 381

On February 17, 1998, President Fidel V. Ramos issued

On June 10, 1998, DoE Secretary Francisco L. Viray wrote Palawan

On October 16, 2001, the Camago-Malampaya natural gas project was

Palawan 's Claim

The Provincial Government of Palawan asserted its claim over

290 18 of the Local Government Code. The National Government disputed

Negotiations took place between the National Government and the

Civil Case No. 3779

On May 7, 2003, the Provincial Government of Palawan filed a

the National Government's share in the proceeds of the Camago-Malampaya

Commenting on the petition, the Republic maintained that Palawan

The Interim Agreement

On February 9, 2005, DoE Secretary Vincent S. Perez, Jr., DBM

The Province of Palawan claims that the National Government failed

The RTC Rulings in Civil Case No. 3779

WHEREFORE, premises considered, the Court declares that the

The RTC held that it was "unthinkable" to limit Palawan's territorial

Applying the principles of decentralization and devolution of powers

The RTC rejected the Department Secretaries' reliance on the cases of

On December 29, 2005, the Provincial Government of Palawan filed a

On January 4, 2006, the aforesaid Secretaries filed an urgent

The RTC subsequently issued an Order which was erroneously dated

WHEREFORE, premises considered, the public respondents

a. HON. Respondent SECRETARY OF THE DEPARTMENT OF

To render a FULL ACCOUNTING of the total gross collections

b. HON. Respondent SECRETARY OF FINANCE MARGARITO

To submit a full report of the actual payments made by Shell Spex

c. HON. Respondent SECRETARY DEPARTMENT OF BUDGET

Effective immediately, NOT TO ISSUE nor CHARGE allotment

d. ALL RESPONDENTS, collectively or individually, effective

e. Furthermore, the HON. Respondent Secretary of Finance

government of Palawan was merely preempting any possible dissipation of

On February 6, 2006, the Department Secretaries filed a motion for

G.R. No. 170867

On February 16, 2006, the Republic, represented by DoE Secretary

[A] becoming sense of modesty on the part of this Court, compels it to

WHEREFORE, premises considered, the Amended Order dated

Consequently, the Republic manifested to the Court that its ad

The Provisional Implementation

On July 25, 2007, the duly authorized representatives of the National

E.O. No. 683

On December 1, 2007, President Gloria Macapagal-Arroyo issued

SECTION 1. Subject to existing laws, and the usual government

1.1. Directive by the Office of the President or written request of

1.2. A certification that the designated projects fall under the

1.3. Bureau of Treasury certification on the availability of funds

Provided, that the DBM shall be subject to the actual collections

SECTION 2. The IA to whom the DBM released the funds

existing budgeting, accounting and auditing rules and regulations. For

SECTION 3. The National government, with due regard to the

SECTION 4. The amounts released pursuant to this EO shall be